Patent Box - The latest

From 1st April 2013 the UK Government will apply a reduced 10% rate of corporation tax on profits attributed to patents.

UK businesses will be able to benefit from the reduced rate regardless of how they use their patents.  To qualify they will need to own a UK or European (EP) patent or a patent from one of the other EU national patent regimes which are still to be agreed for inclusion in the scheme.  Worldwide income from existing as well as new IP will be included in the Patent Box scheme. 

As the scheme will now apply to existing as well as new patents it will be phased in over a 5 year period beginning on 1 April 2013.  The calculation of profit attributed to patents will in many cases be calculated from total profits using a step by step method which it is hoped will be business friendly. 

The Government response to the June 2011 stage of the Patent Box consultation was published on 6 December 2011 and included a number of welcome changes from the previous proposal.  The most notable changes were modifications to the calculation of profit attributable to patents and in particular a reduction to the mark-up rate used to calculate routine profit.  

The Patent Box scheme is now in a technical consultation period which will close on 10 February 2012 with the aim of including the legislation in the Finance Bill 2012.  The Government response to the June 2011 stage of consultation and details of the technical consultation can be viewed here.

Graham Johnson from Appleyard Lees said, "With Patent Box having progressed to technical consultation we are pleased to note the UK Government appear committed to encouraging UK innovation."

For more information or to discuss whether you qualify, contact Graham Johnson or your usual Appleyard Lees contact.