As a business owner, navigating the complex world of taxes can be a daunting task. However, there is one valuable tax relief program that you do not want to miss out on if you can and that's called Patent Box ...
If you make profits from a patent you registered, Patent Box can help you reduce your tax to just 10%!
This program, introduced by the Government in 2013, aims to encourage innovation and boost economic growth by providing significant tax savings for companies that hold patents.
"So, what exactly is Patent Box?"
In simple terms, it is a tax relief program that allows eligible businesses to apply a reduced rate of Corporation Tax (10%) to profits earned from patented inventions. This means that companies can potentially save thousands of pounds in taxes, which can be reinvested into their business for growth and development.
The main objective of Patent Box is to incentivise businesses to invest in research and development (R&D) activities and protect their intellectual property through patents. This not only benefits the individual companies, but also contributes to the overall growth of the UK economy. By encourageing innovation and protecting intellectual property, the UK government aims to position the country as a global leader in technology and research.
To be eligible for Patent Box, a company must hold qualifying patents granted by the UK Intellectual Property Office or the European Patent Office. These patents must be actively used in the company's trade and must have been granted after the 1st of April 2013. Additionally, the company must have undertaken qualifying development activities to create or significantly contribute to the patented invention.
It is important to note that the reduced tax rate of 10% only applies to profits directly derived from the patented invention!
This means that if a company has multiple income streams, it must apportion its profits to determine the portion that is eligible for the reduced tax rate. For example, if a company has 50% of its profits derived from the patented invention, only 50% of its profits will be taxed at the reduced rate of 10%.
One of the key benefits of Patent Box is the significant tax savings it can provide for businesses. By reducing the corporation tax rate from the standard rate of 25% to 10%, companies can potentially save thousands of pounds in taxes. This can have a huge impact on their bottom line and provide much-needed funds for growth and development.
It is worth noting that Patent Box is not a one-time tax relief. The reduced tax rate of 10% is applied to profits earned from the patented invention for the entire duration of the patent, which can be up to 20 years. This provides businesses with long-term tax savings and a stable source of funding for growth and development.
"Patent Box is a valuable tax relief program that businesses should not overlook!"
By encouraging innovation and protecting intellectual property, the program offers significant tax savings and a competitive advantage for eligible companies. So, if you have qualifying patents and are actively using them in your trade, make sure to take advantage of this valuable tax relief.
Patent Box can help you drive some significant growth for your business.
Until next time ...
HELEN BEAUMONT
Would you like to know more?
If anything I've written in this blog post resonates with you and you'd like to discover more about Patent Box and how it can help reduce your Corporation Tax bill, do give me a call on 01908 774323 and let's see how I can help you.
Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.
Tax Planning can make a considerable difference to your tax liability. Helen has specialist knowledge and experience in tax planning and uses every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.
When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.
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