½Û×ÓÊÓƵ

Patent box ― calculating relevant IP profits

Produced by a Tolley Corporation Tax expert
Corporation Tax
Guidance

Patent box ― calculating relevant IP profits

Produced by a Tolley Corporation Tax expert
Corporation Tax
Guidance
imgtext

Changes to relevant IP profits calculations

Numerous modifications were made to the way in which the patent box calculations could be performed with effect for accounting periods beginning on or after 1 July 2016.

The commentary in this guidance note applies to the calculation of relevant IP profits of a company:

  1. •

    that is a ‘new entrant’, ie its first patent box election, or its most recent election, takes effect on or after 1 July 2016, or

  2. •

    the accounting period begins on or after 1 July 2021

CTA 2010, s 357A

Accounting periods which straddle these dates are split into two notional periods and profits and losses are apportioned between them on a just and reasonable basis.

The calculation requires streaming of profits by reference to each IP right, with relevant R&D expenditure directly linked and allocated to the patent or patented item. As a result, the amount of profit that can qualify for the lower effective rate of tax applicable under the patent box regime depends upon the proportion of development

Continue reading the full document
To gain access to additional expert tax guidance, workflow tools, and tax research, register for a free trial of Tolley+â„¢
Powered by

Popular Articles

Carried-forward losses restriction

Carried-forward losses restrictionOverview of the carried-forward loss restrictionAn important restriction in the use of losses carried forward was introduced by Finance (No 2) Act 2017. Subject to a de minimis of £5m (known as the deductions allowance), most carried-forward losses are restricted to

14 Jul 2020 11:09 | Produced by Tolley Read more Read more

Double tax relief

Double tax reliefWhen income arises in a foreign country to a UK resident company and that income is taxable in that foreign country, the UK may give the company relief for the foreign tax by crediting the foreign tax against the UK tax charged on that income. This might include withholding tax on

14 Jul 2020 11:31 | Produced by Tolley Read more Read more

Gifts with reservation ― overview

Gifts with reservation ― overviewIntroductionA gift with reservation (GWR) arises when an individual ostensibly makes a gift of his property to another person but retains for himself some or all of the benefit of owning the property. The legislation defines a gift with reservation with reference to

14 Jul 2020 11:48 | Produced by Tolley Read more Read more