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Changes to relevant IP profits calculations

Numerous modifications were made to the way in which the patent box calculations could be performed with effect for accounting periods beginning on or after 1 July 2016.

The commentary in this guidance note applies to the calculation of relevant IP profits of a company:

1. •

   that is a ‘new entrant’, ie its first patent box election, or its most recent election, takes effect on or after 1 July 2016, or

2. •

   where the accounting period begins on or after 1 July 2021

CTA 2010, s 357A

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 calculation now requires streaming of profits by reference to each IP right, with relevant R&D expenditure directly linked