Reduce Corporation Tax to 10% on Profits from Innovation
The UK's Patent Box scheme allows companies to apply a lower rate of Corporation Tax to profits earned from their patented inventions, significantly rewarding commercial success.
What is the Patent Box?
The Patent Box is a tax incentive that allows companies to apply a 10% Corporation Tax rate to profits attributable to qualifying patented inventions. Compared to the main rate of 25%, this can result in a tax saving of up to 15% on eligible profits, providing a significant cash flow boost and a direct reward for successful R&D.
Eligibility for Patent Box
Understanding the requirements to qualify for the Patent Box scheme.
- Be a UK limited company liable for Corporation Tax.
- Own or exclusively license qualifying patents.
- Have undertaken qualifying development on the patented invention.
- Patents must be granted by the UK IPO, European Patent Office, or other specified EU offices.
What Income Qualifies?
Understanding which types of income can benefit from the reduced Patent Box tax rate.
Product Sales
Worldwide income from the sale of patented products or products incorporating a patented invention.
License Fees
Royalties and other income from licensing out your qualifying patent rights.
Process Use
Income from using a patented process or providing services that use a patented tool.
Infringement
Compensation or damages received from patent infringement lawsuits.
The Innovation Tax Cycle: R&D Credits & Patent Box
R&D Tax Credits and the Patent Box are complementary schemes that support the full innovation lifecycle.
R&D Tax Credits
Reduces the cost of developing new innovations.
Patent Box
Reduces the tax on profits from commercialising those innovations.
By using both schemes, you can fund your development and maximise the financial returns from your commercial success.
Example Calculation
Eligible Profit: £500,000
Standard Corporation Tax (25%): £125,000
Patent Box Tax (10%): £50,000
Tax Saving: £75,000
Unlock the Full Financial Potential of Your IP
Our specialists can assess your eligibility for the Patent Box and help you elect into the scheme, ensuring you maximise the tax benefits from your innovation.
Book a Patent Box Consultation