Article by
Mark Webb 
, Chris Vigars and Stephen Dix, Enacta Growth
Limited
The tax benefits of the 'patent box' tax regime are substantial – corporation tax on relevant profits for companies taxable at the main rate, of approximately 15% in 2013 down to 10% from 2017. However, how do you determine whether any technical innovations you make might qualify as inventions that are patentable?
Patentability
To benefit from the patent box, certain criteria need to be met and will involve obtaining a UK or European patent that covers a technology which generates profit – this applies to any company including the property sector.
The assessment is necessarily technical. The criteria for patentability are the same in the UK and in Europe; the invention must:
- be new
- not be obvious
- not be excluded from patentability.
There are exclusions for 'methods of doing business' and 'programs for computers'.
Fundamentally, if an invention provides a technical advance over what is already known (already known work is called the 'prior art'), it is not excluded from patentability. The technical advance can be almost anything. The invention must also not be obvious over the prior art; this is not much of a hurdle in many cases.
Beneficial research and development (R&D) tax reliefs for qualifying expenditure should also not be overlooked (also mentioned in this issue).
Existing patents
It may help to look at some existing patents to get a better idea of the sorts of invention which can be patented. Some patents are granted in areas which, on first sight, do not obviously qualify. What is important is the invention.
Building system
The Beattie Passive method of construction delivers Code 6 standard new homes quickly and at a lower cost, that offer energy and heat savings.
The passive method was invented as a way to address business issues at the onset of the recession; the costs and time of build, lack of credit, new building codes and lack of skilled staff.
Replacing gypsum with clay
Lehmorange identified that clay building boards are a simple, sustainable and practical alternative to gypsum plasterboards. The board combines the advantages of drywall construction for internal walls and ceilings, with the properties of clay as a natural low carbon building material.
Next steps
The above examples are fairly straightforward. There will be many more examples.
Therefore once you have decided that you may have patentable technology you should speak with a patent attorney for a view on how likely it is to be patented and to us to discuss tax benefits/possible R&D claims.
Determining the tax benefit from the patent box is not a simple exercise but the potential financial benefits can be significant. Now is the time to look at how your company may benefit.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.