How Patent Box Can Benefit Your Manufacturing Business

How Patent Box Can Benefit Your Manufacturing Business

At Haines Watts, we understand the importance of optimising your business to increase your profitability. One of the ways we recommend doing this is by utilising tax incentives, there are many out there, but have you ever heard of Patent Box?

What is the Patent Box?

Patent Box is a tax incentive designed to encourage companies to develop and commercialise patented technologies. It was introduced by the UK government in 2013 to provide a competitive tax rate on profits arising from sales of patented products. The incentive is designed to encourage companies to invest in research and development and to keep the resulting intellectual property in the UK.

How does the Patent Box work?

Patent Box works by allowing companies to apply a lower rate of corporation tax for profits earned from the sale of patented products or processes, and those products containing a patented component.

The reduced tax rate is currently set at 10%, compared to the standard corporation tax rate of 19% / 25% (depending on profit). To qualify for the Patent Box, a company must own or exclusively license-in a qualifying patent and must have undertaken qualifying development on the patented technology. There are also additional requirements that must be met to benefit from the Patent Box, such as keeping accurate records of qualifying income and expenditure.

How can the Patent Box benefit your manufacturing business?

If your manufacturing business invests in research and development, and owns or exclusively licenses-in qualifying patents, Patent Box can provide significant tax savings. By applying the lower tax rate of 10% to profits earned from patented products or processes, your business could see a significant reduction in its corporation tax bill. This could free up funds to reinvest in your business, allowing you to grow and expand your operations.

In addition to the tax benefits, Patent Box can also provide a competitive advantage for your business. By owning or exclusively licensing-in patented technologies, you can differentiate your products or services from those of your competitors. This can help you to win new customers and increase your market share.

How can we help?

At Haines Watts, we can help you to determine whether your manufacturing business is eligible for Patent Box and assist you in making a claim.

If you’re in the early days of considering whether to apply for a patent, our team of tax experts can review your business operations and help to identify any qualifying patents. As part of this, we can put you in touch with a patent attorney, who can help outline the application process and your chances of success.

We’ll be with you every step of the way, helping you to prepare accurate records of qualifying income and expenditure, alongside projections to assess the financial viability of Patent Box on your products into the future. We can also provide advice on how to maximise the tax benefits of Patent Box and help you to plan your business operations to take full advantage of the incentive.

If you are a manufacturing business that invests in research and development and owns or exclusively licenses-in qualifying patents, Patent Box can provide significant tax savings and a competitive advantage.

We can help you to determine whether you are eligible for Patent Box and assist you in making a claim.

For further information on the incentive and how we have helped our clients, read more below.