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Hello again! Something different for this month; we’ve been working with Asquith Bhondi recently, the experts in securing the various tax reliefs that UK businesses in the innovative space can take advantage of. Tax isn’t really our favourite subject, so we asked Connor, one of their senior commercial associates , to put together some thoughts on the opportunities available. Here are his thoughts…
Hello everyone, my name is Connor and, getting straight down to business, I wonder if you have ever thought about the connection between tax relief and intellectual property and how you might be able to make significant tax savings? I’m going to explain a little about a product called Patent Box and outline some important considerations for your business...
Patent Box is a government tax incentive where a specialist tax relief scheme offers a reduced 10% corporation tax on profits from patented innovations and specialist intellectual property.
Patent Box can offer substantial value to companies that successfully develop and commercialise patented technology. HMRC provisionally estimates that 1,650 companies elected into the regime in the 2023/24 financial year, with approximately £1.977 billion of Corporation Tax relief provided. Patent Box can also be used alongside R&D tax relief where the relevant conditions are met, with the two regimes supporting different stages of the innovation lifecycle.
For example, a company developing a new valve technology may claim R&D tax relief on qualifying development expenditure during the design and testing stages. If the technology is patented and commercialised, the company may also be able to elect into Patent Box. Income and expenditure relating to the patented product are then analysed to calculate its Relevant IP Profits, with an effective 10% Corporation Tax rate applying to the qualifying portion of those profits—not necessarily the company's profits as a whole.
Patent Box calculations require detailed analysis of qualifying income, routine and marketing returns, historic R&D expenditure, and the relationship between development activities and intellectual property. These requirements can make it difficult for businesses to assess the potential benefit or prepare a sufficiently supported calculation internally.
Asquith Bhondi manages the process from the initial eligibility assessment through to the calculation and supporting documentation, working alongside your company and accountant where required. Our aim is to identify the relief properly available, prepare a clear and compliant calculation, reduce the administrative burden, and provide support for HMRC enquiries relating to our Patent Box work within the agreed fee and scope of our engagement.
We offer an initial, no-obligation eligibility consultation for both Patent Box and R&D tax relief. Eligibility and the value of any relief will depend on the company's individual circumstances.
These are the questions you should ask yourself:
If you have any questions about how to take advantage of these benefits we would love to hear from you.
Now back to Michael...
I hope that’s useful – if anyone would like to take advantage of the initial consultation then just let me know and I’ll be happy to put you in touch.
Until next time…
Best Wishes
Michael
