What is the relevant period under section 357BLF of the Corporation Tax Act 2010?

The relevant period is the timeframe over which qualifying expenditure is measured for the Patent Box regime. It ends on the last day of the company's accounting period and starts on the relevant day (1 July 2013 for new entrants with accounting periods beginning before 1 July 2021, or 1 July 2016 otherwise), unless the company elects an earlier start date.

Can a company elect an earlier start date for the relevant period under section 357BLF?

Yes, a company may elect to begin the relevant period earlier than the default relevant day. However, the elected start date cannot be more than 20 years before the last day of the accounting period. This gives companies flexibility to capture older qualifying expenditure within the relevant period for Patent Box purposes.

What happens to the relevant period for accounting periods ending on or after 1 July 2036?

For accounting periods ending on or after 1 July 2036, the relevant period is automatically fixed as the 20-year window ending on the last day of the accounting period. At that point, the default relevant day and any earlier election become irrelevant because the 20-year cap applies automatically to all companies.

When is expenditure treated as incurred during the relevant period under section 357BLF?

Expenditure is treated as incurred during the relevant period if it is allowable as a deduction in computing trading profits for any accounting period that overlaps, even partially, with the relevant period. The full amount of that expenditure is included, covering in-house R&D, subcontracted R&D to unconnected persons, and subcontracted R&D to connected persons.

Corporation Tax Act 2010 section 357BLF

Meaning of the "relevant period" etc.

Section 357BLF defines "the relevant period" used when calculating qualifying expenditure for the Patent Box regime, including R&D carried out in-house, R&D subcontracted to unconnected and connected persons, and expenditure on acquiring qualifying IP rights.

The relevant period runs from the "relevant day" (or an earlier elected date) up to the last day of the accounting period, with the relevant day being 1 July 2013 for new entrants whose accounting period begins before 1 July 2021, or 1 July 2016 in all other cases
A company may elect to start the relevant period earlier than the relevant day, but the chosen start date must not be more than 20 years before the last day of the accounting period
For accounting periods ending on or after 1 July 2036, the relevant period is automatically fixed at the 20-year window ending with the last day of the accounting period
Expenditure counts as incurred during the relevant period only if it is allowable as a deduction in calculating the trade profits for an accounting period that falls wholly or partly within the relevant period

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