Existing patents as well as new patents are eligible for the 10% tax rate.

Patent rights which are acquired from third parties can also be eligible for the 10% Patent Box tax rate, provided that the claimant company has done further work in developing the intellectual property or a product into which it is incorporated. 

Patent rights licensed in by a company are also eligible for the Patent Box, provided that the licence provides exclusivity at a national level. 

The tax incentive recognises that the patenting process takes some time. Although the Patent Box only applies to granted patents, there is effectively a ‘catch-up’ mechanism; profits arising from the patented technology for up to six years of the ‘patent pending’ period can be included in the Patent Box claim, for the year in which the patent is granted. Specific advice should be taken in this situation, as there are various considerations to be weighed up.

Patent Box profits can include those arising from sales of:

• Products protected by qualifying patents/rights
• Products incorporating one or more patented items (whole sale included, not just that relating to the patented item)
• Items designed to be incorporated into patent