Knowledge Development Box (KDB)
The KDB is an Organisation for Economic Cooperation and Development (OECD) compliant intellectual property regime which provides Corporation Tax (CT) relief on income from qualifying assets.
From 1 October 2023, a company which qualifies for the KDB regime may be entitled to a deduction equal to 20% of its qualifying profits. This means its qualifying profits may be taxed at an effective rate of 10%.
Up to 30 September 2023, a company qualifying for the regime may be entitled to a deduction equal to 50% of its qualifying profits. This means its qualifying profits may be taxed at an effective rate of 6.25%.
The KDB relief has been extended to include accounting periods commencing before 1 January 2027.
How does a company qualify for KDB?
To qualify:
- a company’s accounting period must begin on, or after, 1 January 2016
- the company must earn income from a usable qualifying asset
- and
- the company must have created the usable qualifying asset from qualifying Research and Development (R and D) activities.
What is a qualifying asset?
A qualifying asset is one that is created from qualifying R and D activities such as:
- a computer programme
- an invention protected by a qualifying patent
- or
- IP for small companies which is certified by the Controller of Patents as patentable, but not patented.
How to apply for KDB
A company should use the Revenue Online Service (ROS) to apply for KDB relief on their CT return.
See the Guidance Notes on the Knowledge Development Box for further information about KDB.