|Year commencing 1 April||2021||2020|
|Percentage of benefits available||100%||100%|
The patent box enables companies to apply a lower rate of corporation tax to profits earned from its patented inventions.
Patent box effectively provides a 10% tax rate to reward UK companies that exploit patented IP rights. You can only benefit from the patent box if your company is liable to corporation tax and makes a profit from exploiting patented inventions.
Your company must also own or exclusively license-in the patents and must have undertaken qualifying development on them.
Which patents are eligible and what must be done with them?
You can benefit from the Patent Box if your company owns or exclusively licenses-in patents granted by the UK Intellectual Property Office or the European Patent Office.
Following countries in the European Economic Area:
- Czech Republic
Your company or another group company must also have undertaken qualifying development for the patent by making a significant contribution to either:
- the creation or development of the patented invention
- a product incorporating the patented invention
Groups of companies
If your company is a member of a group, it must also actively own the patented invention by taking a significant role in managing its whole portfolio of eligible patents.
Your company doesn't have to make all the decisions regarding the portfolio, but it must undertake a significant amount of the management.
Exclusively licensing-in patents
Patent holders may wish to license their inventions for others to develop. If your company holds licenses to use others' technology it may still be able to benefit from the Patent Box. But to do so it must meet all of the following conditions.
It must have:
- rights to develop, exploit and defend rights in the patented invention
- one or more rights to the exclusion of all other persons (including the licensor)
- exclusivity throughout at least an entire national territory - rights to manufacture or sell within part of a country, for example, would not qualify as exclusive
Also, the licensee must either be able to bring infringement proceedings to defend its rights or be entitled to most of the damages awarded in successful proceedings relating to its rights.
The exclusive licensing conditions are relaxed for groups of companies. This recognises that one company in the group may own a portfolio of patents while another exploits them.