The following Corporation Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
Numerous modifications were made to the way in which the patent box calculations are to be performed with effect for accounting periods beginning on or after 1 July 2016. The calculation is now streamed by reference to each IP right, with relevant R&D expenditure linked to the patent or patented item. As a result, the amount of profit that can qualify for the lower effective rate of tax applicable under the patent box regime, depends upon the proportion of development expenditure that has been incurred by the company. A greater level of detail is now needed as the calculations require the allocation of income and expenditure to each sub-stream.
The commentary in this guidance note applies to the calculation of relevant IP profits of a company that:
makes its first patent box election to take effect on or after 1 July 2016, or
elects to apply the post 1 July 2016 rules, if it is already within the patent box regime. A company may wish to do this if, for example, it has only a small amount of grandfathered IP and wishes to avoid operating the two sets of rules in parallel
Please refer to the following guidance notes for details of the calculation of relevant IP profits for existing claimants (ie those that made an election prior to 1 July 2016):
Calculating relevant IP profits ― existing claimants with no new IP rights
Calculating relevant IP profits ― existing claimants with new IP rights
The rules set out below will apply to all companies claiming patent box benefits from 1 July 2021.
Accounting periods which straddle these dates are split into two notional periods and profits and losses are apportioned between them on a just and reasonable basis.
The legislation essentially sets out a four-stage process for calculating the relevant IP profits, broken down into several detailed steps.
The four stages
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
Capital vs revenue expenditureExpenditure of a capital nature is not allowed as a deduction when calculating trading profits. Expenditure of a revenue nature is allowable, provided there is no specific statutory rule prohibiting a deduction and the expenditure also satisfies the wholly and
Why do we need to calculate these amounts?This guidance note sets out details of the initial calculations a group will need to undertake for the purposes of the corporate interest restriction (CIR) regime. For a general overview of the regime, see the Corporate interest restriction ― overview
Working rule agreements are used in the construction industry and similar areas. They are national agreements made between trade unions and employers across the country, setting out the terms and conditions that apply to particular categories of hourly paid manual workers. The workers concerned are
Migration of tax credits to universal creditNew claims for tax credits are no longer possible as they have been replaced by the universal credit for all claimants. Existing claimants will continue to receive tax credits until they are migrated to the universal credit system. Migration will take