Tax breaks for manufacturers

In association with

Suzanne Lomax, partner with accountants and business advisors Beever and Struthers, explains the benefits of tax breaks for innovative manufacturing companies.

Having registered the patent there are further corporation tax savings available - a 10 per cent corporation tax rate is applied to patent income under the Patent Box regime.

The company must have undertaken qualifying expenditure and hold a qualifying IP right or hold an exclusive licence over it - so it’s important to register any IP rights immediately.

• Income from the sale of a patented invention, or a product which incorporates it;
• Income from licensing the patents (ie. royalties);
• Outright sale of patent rights;
• Notional royalties – your company can also benefit from the Patent Box if it uses a manufacturing process that is patented or provides a service using a patented tool;
• Infringement income.

• Formulaic method (pro-rata method) or;
• Profit streaming – rather than using a formulaic approach to identify the profits associated with the income, streaming allows you to calculate the profit by allocating expenses to the relevant IP income stream on a just and reasonable basis.