All innovative Scottish businesses should consider Patent Box tax relief.
Recent statistics have revealed that while more than 460 businesses across Scotland hold, or are within the process of applying for, a patent; only 70 have utilised the relief.
Patent Box was introduced by the UK Government 10 years ago, enabling businesses who generate an income from their patents to claim an effective corporation tax rate of 10% on eligible profits.
With this is mind, it’s disappointing to see that Scotland only constitutes 4% of the amount claimed.
Whether it’s lack of awareness of the relief, or the misconception that UK patents cost hundreds of thousands of pounds, Patent Box continues to be a missed opportunity for many - especially when considering that patent and trade mark rates have been rising significantly over the last four years.
Innovation will be key for business owners when it comes to being able adapt, pivot and thrive during these economically challenging times. If you are coming up with new ideas, products or services, ensuring that your intellectual property is protected so you can retain and grow market share is vital.
Patents and trademarks can offer this protection, and the reality is that holding a UK-only patent can cost around £6,000.
In the long run, the rewards of the investment can be huge, especially when taking a hybrid approach towards Patent Box and R&D tax relief.
And with corporation tax rates rising to 25% as of 1 April, Patent Box has never been more valuable, as companies will be paying more tax on their profits, making the value of the tax break even bigger.
Jonathan Scott is a tax partner at business advisory firm Haines Watts
