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Taxes

UK Patent = 17% Tax Saving, But Any Other Benefits?

We are all now well aware of the company tax savings afforded to UK incorporated companies using the Patent Box scheme introduced early 2013 by the UK Government. This will provide up to a 17% company tax saving on income received on patented product. As a further benefit, the tax saving can be applied to income received from overseas sales on that UK patented product. And it gets better: any part of the product that is UK patented, or process used to produce it, can be used to apply for the very beneficial tax relief on the whole item.

So, all of this is very beneficial for UK registered companies, but are there any additional benefits? Well, an obvious benefit is potentially being able to accelerate a counterpart overseas patent application. Okay, so let me clarify this for you. In order to apply for the Patent Box tax relief scheme mentioned above, the British patent application must first be granted. Usually, in the UK, a patent application can take up to four and a half years to grant. Obviously, this is too long if you want to be claiming your tax relief annually. Therefore, when you file your British patent application, we should accelerate the prosecution by combining the search and examination steps along with accelerating publication. By doing this, grant can be achieved in the UK in around 8 months or less. Ideal for the tax relief Patent Box scheme.

Your overseas patent applications are typically filed around the first anniversary of your British patent application and back dated. It therefore now becomes convenient to utilize another process, implemented between patent offices in various territories on a reciprocal basis. This process is called the Patent Prosecution Highway, also known as PPH.

The USA is a huge market for most companies in the UK and Europe. However, there is no simple acceleration request for quickly and, importantly, more cost-effectively, obtaining grant of a US patent. However, if you have received a positive confirmation of patentability of your UK patent application, in other words a positive examination report or better still grant of your UK patent, then the Patent Prosecution Highway scheme can be used to fast track the examination of the counterpart US patent application.

As a further benefit, there is no official fee for the Patent Prosecution Highway. Although there is some preparatory work required in the request, the downstream cost savings, particularly in high cost territories, such as the USA, Japan and Korea, for the latter two being predominantly translation costs, could very well be significant.

In summary, if you are accelerating the examination procedure of your UK patent application in order to obtain grant quickly to achieve make use of the available UK company tax savings, then consider using the Patent Prosecution Highway if subsequently filing overseas, and particularly in the USA . This beneficial scheme could reduce these typically substantial overseas examination costs, but is only applicable if your UK patent is granted or has an acknowledged patentable aspect.