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UK Government to reduce tax on income derived from patents

In an unexpected move, the Chancellor of the Exchequer has used his pre-budget report to announce a significant reduction in tax on income streams derived from patents. This measure will apply to companies that pay tax in the UK and derive a portion of their income from patents.

The new arrangement, a so-called 'Patent Box', is intended to encourage investment in innovative industries. It will do so by reducing the standard rate of corporation tax on patent income by nearly two-thirds from the current 28% down to 10%. This may also be seen as an attempt to stem the increasing trend of 'offshoring' IP assets to lower-tax jurisdictions.

9 Dec 2009

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