The Patent Box will provide a reduced corporation tax rate of 10% for companies exploiting patented inventions or certain other medicinal or botanic innovations. It will be introduced progressively from April 2013.
The reduced rate will apply to a proportion of the profits derived from:
- licensing or sale of the patent rights
- sales of the patented invention or products incorporating the patented invention
- use of the patented invention in the company’s trade
- infringement and compensation
The Patent Box will be an optional regime - companies elect into it.
The reduced rate of tax will be delivered through an additional deduction in the corporation tax computation.
To minimise administrative costs and compliance burden, Patent Box profits for many claims will be calculated using an approximate, largely formulaic approach. Companies will however be able to opt to identify the profit through a more bespoke calculation.
Click here to find an overview about the Patent Box.
Click here to find detailed guidance about the Patent Box set out in the HMRC CIRD manual (CIRD 200000)