The patent box is an elective regime that provides for an effective 10% rate of corporation tax on worldwide profits attributable to qualifying patents and similar intellectual property (IP) rights. The full benefits of the patent box were phased in over five years (up until 1 April 2017).

In accordance with the BEPS Action Plan 5 requirements, the patent box rules changed on 1 July 2016 to introduce an R&D fraction restriction, potentially reducing the value of patent box claims. A number of ancillary changes to the rules were also brought in, to properly implement the restriction. Claimants whose election into the patent box is effective from a date prior to 1 July 2016 were able to continue claiming under the old (grandfathered) rules until 30 June 2021 in respect of qualifying IP applied for before 1 July 2016 (see Practice Note: Patent box—grandfathered rules—standard calculation of relief). The changes relate to the calculation of the patent box benefit only, and not to the features covered in this Practice Note.

Patent boxes have been