Patents, Patent Box and R&D Tax Credits
Date: 9th November 2016
Taking out a patent is a medium term activity for an innovative business. It costs money now but the protection of your innovative product has a long term payback. You should discuss your interest with a Patent Lawyer in the first instance.
Patent Box is a new BIS initiative which allows your patented product to generate profits at a reduced rate of corporation tax. It is being phased in now and requires professional advice on how to set up a method of isolating and recording the costs associated with the product. The payback is a significantly reduced rate of corporation tax for profits associated with the patented product and, better still, if it is an integral part of a larger assembly, then the tax benefit will apply to the whole item. Again, it is a pay now and benefit later opportunity. You should talk to your Accountant or to specialist Consultants who can advise you.
R&D Tax Credits is rapid generator of immediate cash and credit against your corporation tax bill. It doesn’t even matter whether you made a profit or a loss. This Government initiative is designed to reward innovative businesses who are spending development costs on hardware, software or processes. It benefits a very wide range of businesses from Website Designers, Games Developers, Medical Appliances, Instrumentation, Test and Measurement, Electrical, Materials Handling, Construction Machinery, Motorsport, even Professional Firms who have paid subcontractors to develop clever internal intranets – the list goes on and on. Typically it will take just 28 days to receive your HMRC rebate or Corporation Tax Credit and the funds can be part of a war chest which will finance the patent application and Patent Box set up costs. You should talk now to your Accountant or seek free advice from a specialist R&D Tax Consultant.
Jaime Lumsden, Director