There is good news for limited companies with patents. HMRC introduced the ‘Patent Box’ which offers a 10% corporation tax rate on profits attributable to qualifying patents. This has applied for limited companies with profits arising after 1 April 2013.
The reduced tax rate not only applies to royalty income but also includes profits derived from patented products or patented processes. HMRC have confirmed that there only has to be one patented and UK managed invention embodied in a product for the entire product to be within the patent box. So the scope of the relief is very wide and many companies will be able to qualify for this lower rate of tax