Patent box guide posted on HMRC website

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HMRC has posted a guide on how UK companies can play less tax on profits from their patented inventions.

From April 2013, any profits from inventions that are protected by a UK patent will be taxable at a significantly lower rate of corporation tax.

The new “patent box” tax rules mean that companies pay a lower of corporation tax on profits earned after 1 April 2013 from patented inventions and other innovations. The relief will be phased in from 1 April 2013, starting at around 15% and falling to 10% by 2017.

In order to receive the tax break companies must also own or exclusively license-in the patents and must have undertaken qualifying development on them.

HMRC has explained how and when companies can claim the patent box tax relief.

Qualifying companies include those that own or licence patents granted by either the UK Intellectual Property Office or the European Patent Office.

In her latest AccountingWEB tax podcast, Anne Fairpo, vice-president at the Chartered Institute of Taxation urged members not to get too excited, as HMRC’s latest guidance on patents didn’t reveal anything new. “It's a skimpy outline that reverts back to the Budget Technical Note for anything interesting,” she said. “There is 'proper' guidance promised for the autumn, but this isn't it.”

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About Nick Huber

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I’m a specialist business journalist and have a particular interest in tax and technology. 


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06th May 2013 07:49

Patent Box and Inventor clients



This is excellent news for the UK. Perhaps this new tax will encourage execs to look harder at patenting, after all if they license a third party at 10% it looks like the third party will only pay 10% on any profits relating to the patented product, so in essence the licence will cost the licensee nothing.This tax will also apply to foreign patents where the capital flows to the UK. Patenting is international and today both the searching and filing can all be done online.The high fees attorneys charge may be worth paying if you are a corporate and have to employ somebody to do the patenting anyway, but if you are an individual, substantial attorney fees running into thousands, create a very significant barrier. A complete UK patent actually only costs £230 in total, the UK IPO is amazing and fantastically helpful and it is now entirely possible to patent internationally yourself from your laptop, if you know how to go about it. The difficult bit is having something to patent and understanding what is and isn’t patentable. A great cheap Amazon ebook, which tells you how to go about patenting internationally, step-by-step, is DIY Patent Online. It lists all the fees and has links to all the sites you need plus you can read some of it free on Amazon. They also have a web site and unlike most patent site, which are a cure for insomnia, they aren’t trying to sell you any services. Many spout off about patents knowing little about the subject in reality. The only patent that is really worth it’s salt is a Utility Patent – they even call them utility patents in the States but in the UK they are just called Patents. These must have an 'Inventive Step' and must not be ‘obvious to somebody skilled in the art'. These are not ro be confused with US Design Patents (UK Design Registration) or Australian Innovation Patents. which are easy to get and get around. Patenting is challenging when you don't know how but like everything else, once you have the hang of it, it's quite straightforward. Most businessmen are busy building empires with all the costs involved, these are tangible, you can see them. However my moniker is ‘If you can touch it, don’t touch it’. Intellectual Property is the only thing worth having, owning the IP makes you the master, the rest is just overhead, which is an idea well worth disseminating to your clients.

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