The UK patent box regime is a statutory tax incentive regime that enables companies to claim an effective 10% corporate tax rate on certain qualifying IP profits. The patent box regime is a valuable UK incentive and will become even more beneficial with the announced increase in the UK corporation tax rate to 25% from 1 April 2023. All companies claiming patent box relief are subject to the new nexus regime from 1 July 2021. These new rules require claimants to track their R&D expenditure in order to calculate a cumulative ‘nexus’ R&D fraction, between 0 and 1, and apply this to their relevant IP profits, which must now be calculated using a streaming methodology. In most cases, compliance with the nexus patent box regime needn’t be onerous. However, claimants will be expected to document their position and monitor it going forwards.
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The UK patent box regime is a statutory tax incentive regime that enables companies to claim an effective 10% corporate tax rate on certain qualifying IP profits. The patent box regime is a valuable UK incentive and will become even more beneficial with the announced increase in the UK corporation tax rate to 25% from 1 April 2023. All companies claiming patent box relief are subject to the new nexus regime from 1 July 2021. These new rules require claimants to track their R&D expenditure in order to calculate a cumulative ‘nexus’ R&D fraction, between 0 and 1, and apply this to their relevant IP profits, which must now be calculated using a streaming methodology. In most cases, compliance with the nexus patent box regime needn’t be onerous. However, claimants will be expected to document their position and monitor it going forwards.
If you are not a subscriber, subscribe now to read this content.
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