Similar to R&D Tax Credits, this is another great incentive introduced by the UK Government designed to encourage businesses to invest more in innovation and whilst its primary aim was to encourage growth in the high-tech sector it can easily be used by other sectors. Qualifying under the Patent Box regime allows your business to pay only 10% on taxable profits instead of the usual 19% which presents a huge saving! It’s also a common misconception that software can’t be patented, but we’ve helped a number of clients secure patents against their development activities and benefit from the patent box regime. If your company hasn’t filed any patents it’s worth noting that obtaining one is relatively inexpensive and quick to obtain, with the inventive step criterion sometimes being easier to meet than at some other patent offices. Our strong network allows us to connect companies with a number of Patent Attorneys that can help explore the potential to apply for a patent and we can then look at the potential tax saving as a result.

We had worked with an established automotive business who have a number of patents filed with the UK IPO and European Patent Office and wanted to realise the benefits of claiming under the UK Patent Box regime. This business was a leader in their field having won numerous awards in the automotive industry for designing energy efficient turbo chargers that would result in higher performance setting a new industry standard.

Managing their effective tax rate was high on the company’s agenda and ensuring cash flow was consistent, which could then be reinvested in new product development.

This business was already utilising the generous R&D incentive scheme so we were able to save time with gathering the necessary information needed in order to prepare their claims and get key buy in from key stakeholders. Whilst each scheme individually can be quite complicated, which is often a barrier to smaller businesses making a claim, we pride ourselves on making things simple for our clients.

The benefit has resulted in the client saving hundreds of thousands of tax over a number of years.

Our work included:

  • Identifying the relevant patents that would qualify and ensuring all the qualifying conditions were met

  • Preparing the calculations for tax payment purposes

  • Preparation of the report documentation to be submitted to HMRC

Is it time to reconsider this underutilised incentive and see how much your business could save in tax?

Find out whether your business could benefit from the patent box regime by answering these simple questions:

  • Your business is a limited company subject to UK Corporation Tax?
  • Your business owns IP/patents in the UK or Europe?
  • Your business has been undertaking some form of development activity?

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