Posted by James Pearson on 09 Nov 2012

Opening the Patent Box

As part of a drive to both encourage investment in research and development and to discourage the practice of intellectual property being owned offshore, HM Revenue & Customs (HMRC) have announced the introduction of a new rate of tax for patent income received by companies, which they are calling the Patent Box.

New Rate of Tax for Patent Income

From 01 April 2013, 60% of company income from qualifying patents will be partially subject to tax at a corporation tax rate of 10% rather than 23%. For the following year, 70% of qualifying patent income will benefit from this treatment with further annual 10% rises until 100% of qualifying patent income is covered from 01 April 2017.

In order to qualify for this lower rate of tax, the patent must be registered with specific organisations and the claimant company must have made a significant contribution to either the development of the patented invention or its implementation.

These changes add to the recent enhancements of Research & Development relief, discussed here, to mean that there are now substantial tax savings to be made from the work needed to develop patentable inventions and lower rates of corporation tax on the income those patents generate. This makes UK companies very attractive vehicles for the development of new and innovative ideas.

Tax Innovations

Tax Innovations has considerable experience with Research & Development claims and the tax efficient structuring of intellectual property. Contact us for additional information about these reliefs or any alternative tax strategies involving patents and other intellectual property.

Contact us

If you would like any advice regarding the above article or would simply like to discuss other ways in which we could help you or your business, please contact us on 01962 856 990 or


See also…

Research & Development (R&D) Relief Changes

Research & Development

Finance Act 2018 Enacted

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