Guest blog by EEF Advantages Partner, Jumpstart
Luckily these days innovative businesses are no longer tied to restrictive bank loans or the desperate rates of asset based financing. The last few years have seen flourishing sources of government funding to support innovation, such as R&D tax relief or Patent Box, with the latter designed to encourage companies like yours to commercialise their intellectual property and R&D in the UK.
R&D tax relief is a valuable source of funding for any innovative business, but it is only available while the company is spending money on eligible R&D.
On the other hand, for companies fortunate enough to have patents resulting from innovation projects, Patent Box can offer much more attractive long-term funding benefits, giving companies access to a preferential corporation tax rate of 10% on ALL profits directly linked to the commercial exploitation of patents over the life of the patent (which can be up to 20 years!).
To qualify, you must be a UK company that holds qualifying IP rights or an exclusive IP license, and receive relevant IP income. Your business needs to be profitable with patents that have been granted, are active and registered in the UK.
The great news is that, you can claim both R&D tax relief AND Patent Box concurrently. The two schemes are not mutually exclusive and many of the companies claiming relief under Patent Box are already claiming R&D tax relief.
However, companies can be put off pursuing Patent Box due to the daunting and often complex way in which claims are made. There is no box on the company’s tax return for making the election. Instead, you apply the reduced 10% rate by subtracting an additional trading deduction from your corporation tax profits.
Finding the right innovation funding mechanism can be complex and time consuming, but if you choose the most appropriate advisor and approach, it can be highly worth your time.
Innovation Funding Expert and EEF’s Advantages Partner Jumpstart is here to make the process as easy as possible for you.
To arrange a free consultation to discuss your own Patent Box specific circumstances, to identify how we can work with your team to improve the claim process and realise greater value for your business, contact the Jumpstart team through Sandy Findlay on 07807 739033, or email [email protected]