Supporting UK Composites

Patent Box

Effect of EU referendum on patents

UK national IP Rights will be unaffected by UK exit from the EU. All UK patents, UK registered trade marks and UK registered designs obtained by application to the UKIPO will continue to have full effect in the UK.

The European Patent Convention and the European Patent Office (EPO), are not EU institutions and there is no change to representation before the EPO in all respects. 

When the UK exits the EU, there will be new processes available to protect or maintain IP rights in the UK. New provisions will be put in place. For up-to-date information visit the member resource area.

Patent Box Scheme

Composites UK through Business Partner HOW2 Business Solutions can help companies through the Patent box Scheme. Members will receive a 10% discount on the service fee.

Simply contact Composites UK and we will put you in touch with one of How2’s specialist

The Patent Box Scheme aims to create a competitive tax environment to incentivise companies to develop and exploit patents in the UK as well as actively manage their patentable IP. The scheme potentially benefits any organisation that as part of its business activity is innovating in the areas of either product or process as part of its services and or activities.

The Scheme
Corporation Tax on profits from the sale of patented products and certain other innovations is reduced to 10%.

  • The 10% tax rate applies to worldwide profits arising from the exploitation of patents granted in the UK by the IPO or by the European Patent Office or from exclusive license over such patent rights.
  • Companies can still claim under the R&D tax credits scheme, benefitting from significant “double” tax relief, as long as each regimes criteria are met.
  • A company must scheme elect, substantiate their claim within the rules of the scheme and actively claim their Patent Box benefit in their annual Corporation Tax return.

What Is It Worth?
In 2013/14 a company with taxable profits that qualify in full could benefit from a Corporation Tax reduction of 33% rising to 50% over the scheme phase in period.

  • The Patent Box scheme applies from 1st April 2013, the full benefits phasing in over a 5-year period.
  • 60% of the benefits are available from 1st April 2013, rising by 10% pa to 100% of benefit from April 2017.

Even if the patented element of the product is minor, 100% of income arising from the product should qualify.

Who Can Benefit?
Any UK company liable for Corporation Tax and is making a profit from exploiting patented inventions qualifies.

  • Product and Process patents both qualify.
  • With a process patent for say a manufacturing process or a patented tool, the claim calculation is based on a notional royalty.
  • The company must own or license out the patents and meet the scheme’s “development criteria” by making a significant contribution to either;
  • The creation or development of the patented invention or a product incorporating the patented invention and have performed significant management activity regarding the development or exploitation of the patented innovation or product using it.
  • If your company is a member of a group, it may qualify if another group company has undertaken the qualifying development.
  • If you license-in the patent you may still be able to benefit if you meet certain conditions.

Patents Pending or Applied for?
Profits generated in the “Patent pending” period can qualify for the 10% corporation tax rate.

  • The 10% reduction is realised in the CT return following Patent Grant.
  • The regime requires a company to elect into the scheme together with a financial estimation of the claim in advance of the patent being granted.

 

Unified Patent Court

The UK Parliament has approved the legislation (The Patents (European Patent with Unitary Effect and Unified Patent Court) Order 2016) which will give effect to European Union legislation in relation to the European patent with unitary effect and to the international agreement on the Unified Patent Court in the UK.

For more information download the following briefing notes from HGF: 

 

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