Patent and Trade Mark Attorneys
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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.
The Patent Box arrangement is intended to apply to patent income from April 2013 and will apply to patents granted after the Finance Bill planned for 2011 has passed into law. It may therefore be relevant to patent applications being filed now.
Additional innovation-friendly measures announced by the Chancellor include removing the condition that any IP deriving from research and development must be owned by an SME making a claim for an R&D tax credit. This will allow companies to benefit from the UK’s generous tax credit scheme without distorting their commercial arrangements in relation to IP.
9 Dec 2009