Is the UK boat industry missing out on innovation tax savings?
Intellectual Property (IP) is vital for the UK boat sector, not only does it create much needed value in the sector but it protects its innovations and the many great brands that make it up, writes Robert Games.
However, there are also significant tax savings which the boat sector could be missing out on.
Nowadays, most companies appreciate the need to protect their IP, either through patents, trademarks or registered designs.
Securing a patent for an innovation adds value to a company and can give a monopoly to exploit a technical advantage over any competition. However, many companies in the marine sector may be unaware of the considerable tax benefits that come with a registered patent.
IP more than just protection
Since April 2017, businesses have been able to take full advantage of a 10% corporation tax rate on profits derived from patented inventions. This means that with a patented product businesses can receive a 50% reduction in corporation tax. This is no small amount and the reduction lasts for the lifetime of the patented product – an incentive the UK marine sector needs to be making the most of.
For a marine company to qualify for the tax incentive, the patent needs to have been developed in the UK and either owned by your company or exclusively licenced to it. You will also need to show that your company has made a significant contribution to the development of the patent or invention or the product incorporating it.
While patents need to be in place before the tax relief can be claimed, this can be back dated to take into account the time the application was pending approval. In addition to this, if the patented item is deemed to be an integral part of a product such as a hull or drive system, then the tax relief could apply to the whole boat as sold.
The Patent Box tax break lasts for the life of the patent so it’s important to approach patents from a strategic point of view. If you think you might be missing out on the tax savings, the first step is to undertake an IP audit. Make sure that any and all potentially patentable inventions are protected.
My advice is simple – if in doubt talk to a patent attorney. They can provide advice on how to develop a strategy and set out how to approach an IP. It's always difficult to try and find sufficient funds to protect products and brand, but ultimately protecting an IP is a very worthwhile investment which will create value in the company and potentially save thousands in tax.
Robert Games is the MD of Albright IP
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