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Is your business geared up for Patent Box?

28 May 2012

From April 2013, UK businesses will be able to benefit from a reduced rate of Corporation Tax on profits from inventions protected by a qualifying patent. Patent and trade mark attorneys at IP firm, Appleyard Lees, believe companies need to be up to speed with Patent Box and what it means for their business in order to reap the full benefits from the changing legislation.

The incoming legislation is set to be introduced in a bid to encourage businesses to invest more in UK-based research and development. It is hoped it will help drive financial recovery and enhance global competitiveness.

However, IP specialists at Appleyard Lees feel there is work to be done by companies to prepare for the legislation. Partner, Graham Johnson says it is important that businesses review their products, manufacturing processes and R&D plans well before 1 April 2013 to consider where patents might be applicable or they could risk missing out on tax savings.

“Businesses will need to look at keeping a separate record of sales of patented and non-patented products from April 2013.  This means Patent Box is not a matter solely for R&D specialists and dialogue needs to be in place between accounts, sales and R&D teams to ensure businesses can take full advantage of the tax break.”

Businesses should also keep in mind that Patent Box is supplementary to R&D tax credits rather than a replacement to them and many businesses are not taking advantage of tax credits available to them.

Owning patents could now deliver tax savings as well as keeping competitors at bay.  That means patents may now be an attractive proposition for new products and processes as well as refinements to existing products or process in circumstances where business may previously have ruled patents out on cost grounds.

The 10 per cent Corporation Tax cited under Patent Box legislation will apply to 60 per cent of qualifying profits in 2013-14, increasing to a full 100 per cent of profits in 2017, as part of a phased amendment to tax rates.

In addition to communicating the implications of Patent Box to businesses, IP specialists at Appleyard Lees have launched an annual growth fund valued at £50,000, to provide financial support for SMEs seeking to protect their bright ideas and innovations and turn them into commercial success.

Patent Box - five fast facts
- To qualify for Patent Box, your company needs to be based in the UK and have a UK or other qualifying European patent.
- Patents can be obtained for relatively minor developments to existing products or processes as well as to completely new products or processes.
- To be patentable, the development must be kept confidential until a patent application is filed and it must also be new and inventive when compared to known solutions.
- In the UK, we expect to have a patent granted within four years of filing, although in some cases it can be as little as 18 months.
- It can cost only a few thousand pounds to secure a UK patent and, provided that modest annual renewal fees are paid, the patent can remain in force for 20 years.

For more information about Appleyard Lees, click here. For HM Treasury/HMRC guide, click here.


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