The Patent Box regime introduces a new Corporation Tax relief which gives a reduced rate of tax on income deriving from the commercial exploitation of patents.
The relief will apply from 1 April 2013.
Under the proposed measures a company will qualify for relief if it:
- holds qualifying intellectual property (IP) rights, or
- holds an exclusive licence in respect of the those righs at any time during an accounting period.
Additionally, companies who are part of a group must meet an active ownership requirement.
Qualifying income
- Taxable income in respect of qualifying IP rights or an exclusive licence which was sold in a previous period. So this includes royalties, sale proceeds, income from patented products or infringements.
Patents
UK and European Patents
Some restrictions on the IP income for certain industries sectors - such as banking and finance.
Tax relief
Relief is give according to a formula:
Profits x main rate – IP rates (10%)/main rate
Small print
Measures introduced in the 2012 Finance Bill will amend Part 8A CTA 2010 from April 2013
The Government launched a "Patent Box" consultation in June 2011 proposing to allow companies to apply a 10% corporation tax rate to profits attributed to patents.
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