Can your innovation save you tax?
30 May 2019

Can your innovation save you tax?

By Naylor Wintersgill Tax Director Chris Gumbley

Making sure you are adopting new ways to thrive and compete in modern markets through continuous innovation can give your business a competitive edge, but, could this innovation also help you to save on tax?

With new technologies constantly changing how goods are manufactured, the industry generally sees government approved tax reliefs such as Research and Development (R&D) tax credits being used, but there are still thousands of pounds being lost in tax relief by eligible manufacturing companies every year.  

There are also still some misconceptions from business owners that these tax saving are confined to larger organisations. However, innovation in the manufacturing sector can take many forms and businesses are often undertaking R&D in their day-to-day activity, without even realising it.

What is Patent Box?

Going hand in hand with R&D tax credits, Patent Box is part of the Government’s range of incentives to encourage innovation in many sectors, including manufacturing.

The scheme provides companies the opportunity to apply a lower corporation tax rate to profits credited to qualifying patents owned or exclusively licensed.  From 1st April 2017, all relevant profits a company earns from its patented inventions can benefit from a reduced rate of corporate tax (10%).

Taking advantage of Patent Box

If you’re a company liable for UK Corporation Tax and you hold qualifying IP rights or an exclusive IP license, and make a profit from exploiting the active patented inventions, you could benefit from the Patent Box regime. Your business will need to have made a ‘significant contribution’ to either the creation of development of the patented invention, or a product incorporating the patented invention, and there are guidelines on what patents are eligible. 

Although the process for calculating profits which qualify for patent box can be complex, the Corporation Tax savings made by a qualifying business electing in can be significant.

About Naylor Wintersgill

Naylor Wintersgill is the largest firm of independent chartered accountants in Bradford city centre and we have been passionate about supporting our clients, many of whom are part of the local manufacturing community, to grow and succeed in Bradford for over 100 years.

If you would like to find out more about how Naylor Wintersgill could proactively help you and your business utilise a full range of tax planning opportunities to help keep more of your hard earned cash, visit the website  to see the full the range of services and support on offer.




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