Let’s Talk Tax - Patent Box Regime – August 2013

Patent Box – cash benefit hits more companies

The much anticipated Patent Box legislation is now live (as of 1 April 2013) allowing UK companies the potential to pay corporation tax at a rate of only 10% on worldwide profits derived from patents. This can halve the rate of tax paid by those companies. This month the cash benefit will be felt by many companies as they prepare to make their installment payments.

The Patent Box regime affects all UK companies who derive profits from a wide range of patents, including those granted by the UK and EU Patent Offices. Both the patent holder and licensee can qualify and the patents can cover products or processes.

The rules have been a long time in the pipeline, but many companies could soon be feeling the cash benefit from the relief when preparing their corporation tax installment payment. Broadly speaking a company paying tax by installments will pay its first payment half way through the seventh month of its accounting period. This means that companies with a 31 December year end will be paying tax on 14 July 2013. This payment should now reflect the benefit of the Patent Box.

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