As of April 2013 the UK government has offered a tax incentive to UK companies by reducing the rate of corporation tax payable on profits derived from patented technology to 10%.
The 10% rate is not effective immediately, but the corporation tax rate for such profits will gradually reduce to reach 10 % in 2016.
In general, to qualify for patent box tax savings there are three main requirements (although others may apply):
1. Qualifying IP – the profit must relate to income derived from technology patented before the UK Patent Office (UKIPO) or European Patent Office (EPO) – other IP rights can qualify but these are the main two for UK-based companies.
2. Qualifying person – the person claiming the tax reduction must be a company subject to corporation tax.
3. Development requirement – the company must have created the patented technology or made a substantial contribution to its creation.
For more information on the patent box please see our full patent box blog post.