Patent box ― small claims treatment

Produced by Tolley
Patent box ― small claims treatment

The following Owner-Managed Businesses guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Patent box ― small claims treatment
  • Eligibility for small claims treatment
  • Calculating the small claims amount
  • Practical considerations

The patent box legislation sets out the relevant steps that should be followed in order to calculate the qualifying IP profits to which the reduced rate of corporation tax may be applied. The process can be complex to implement for smaller companies, therefore the legislation provides for a ‘simplified’ small claims treatment which can apply, where a company (that meets the qualifying conditions) elects.

Eligibility for small claims treatment

An election for the small claims treatment can only be made if:

  1. the company carries on only one trade during the accounting period

  2. the qualifying residual profit (ie the amount arrived at from the relevant IP sub-stream after deducting the allocated debits and a routine profit element from associated trading profits) of the trade is less than £1,000,000 and, in the last four years, the company has n

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