Patent Box – Protect Your Invention & Explore The Tax Opportunity

A patent may do more for your business than protect an idea

Your company may be developing valuable inventions without recognising them as patent opportunities. A new product feature, a better manufacturing method or a technical improvement to a service could all be worth discussing.

A patent can help protect that advantage. If the invention is patented and the relevant conditions are met, it may also allow your company to benefit from the UK’s Patent Box: an effective 10% Corporation Tax rate on qualifying profits attributable to patented inventions.

Developed something new?

Talk to our patent attorneys about whether a patent application fits your plans.

How does Patent Box work?

Patent Box applies to eligible profits, not automatically to all company profits. Qualifying income can come from selling a patented product or a product incorporating a patented invention, licensing or selling patent rights, and certain other sources. Special rules can also apply where a patented process or tool is used to make products or provide services.

The company must elect into the scheme. Its tax adviser then identifies the relevant income and calculates the profits eligible for the effective 10% rate. The benefit depends on the company’s circumstances.

Why consider it before you file?

Think about the invention’s commercial role. Is it used in a profitable product range? Does it improve a process your business relies on? Could patent protection help maintain an advantage while also opening up a possible Patent Box claim?

For example, an improvement to a component used across a successful product range may be patentable even though the overall product is already established. The scope of the eventual patent and its relationship to the product will matter. That is why patent strategy should begin with what the business actually makes, sells or uses.

Filing an application does not itself secure tax relief

A qualifying patent generally needs to be granted before a Patent Box benefit can be obtained. In certain circumstances, eligible profits earned while the application was pending can be included after grant, subject to elections, time limits and a maximum pre-grant period of six years. Early discussion with a tax adviser can help preserve that possibility.

Could your company qualify?

Patent Box may be relevant if your company pays UK Corporation Tax, earns profits from exploiting a patented invention, owns a qualifying patent or holds an eligible exclusive licence, and has made a significant contribution to developing the invention or a product incorporating it.

UK and European Patent Office patents can qualify, as can certain patents granted in specified European countries. Group ownership, development arrangements and R&D expenditure can affect the calculation. A tax specialist should check the position for your company.

Start with an invention review

We can help identify potentially patentable developments, assess whether filing is commercially worthwhile, and draft an application with the product or process in mind. If you already own patents, we can help establish what they protect and how that relates to your business. We can work with your accountant or introduce a Patent Box specialist where needed.

Speak to us before disclosing a new invention publicly

Early advice gives you more options for protecting it.

Explore your next patent opportunity

Speak to Cameron IP or request a call back about a new invention, an improvement to an existing product, or patents you already own.

Cameron IP provides patent and IP advice, not tax or financial advice. Patent Box eligibility, elections, calculations and the amount of any benefit should be confirmed with a suitably qualified tax adviser. Patent applications are not guaranteed to be granted.  HMRC sources: Patent Box Overview; Pre-Grant Profits; and Computation Guidance.

Further resources

See an interview below with Cameron IP’s Louise Carr and tax advisor Bonham & Brook’s Vishal Patel, where the process is further explained.