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Time to start thinking inside the box

20 August 2012

HMRC recently published a guidance note on the new Patent Box scheme. The Patent Box enables companies to apply a lower rate of Corporation Tax to profits earned after 1 April 2013 from their patented inventions and certain other innovations.

A company can elect to benefit from the Patent Box if it is liable to Corporation Tax and it makes a profit from exploiting qualifying IP. The company must also own or exclusively license-in the qualifying IP, and have undertaken qualifying development (see the Guidance Note for full details).

The relief will be phased in from 1 April 2013 and the lower rate of Corporation Tax to be applied will be 10%.

The Patent Box presents a great opportunity for companies involved with innovation to make a significant tax saving. Companies wishing to benefit from the Patent Box must make their election within two years after the end of the accounting period in which the relevant profits arose.

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