The new Patent Box tax incentive is phased in this month allowing qualifying companies to claim a beneficial rate of corporation tax of just 10% (by 2017) on worldwide profits derived from qualifying patents.
Responses from UK business so far has been disappointingly muted so its good to see that this new relief is attracting the attention of overseas companies who may now take the UK seriously as a location to set up new ventures – particularly hi-tech businesses.
See this extract from David D. Sprague of Baker & MacKenzie LLP in Palo Alto CA:
“What makes the U.K. patent box particularly interesting for U.S. multinationals is that the United Kingdom has always been a logical base of foreign operations for U.S. groups. For example, the U.S. high-tech community has found the United Kingdom to be an attractive jurisdiction in which to locate regional management headquarters, and some English industrial parks look like they have been transported from Silicon Valley. Advertising-supported internet-based businesses are particularly attracted to the United Kingdom, as London remains the region’s preeminent center of the advertising business.
So if the United Kingdom can get its patent box right, there is a real possibility that some U.S.-based internet and similarly situated businesses could see reasons to consolidate more activities in the United Kingdom, even making their U.K. group entities the central economic entrepreneur for their offshore structures.”
If we manage to pull this off and attract exciting new businesses and jobs – this would be a great result for the UK.
In the meantime, if you are a start-up, growing business or more mature SME – please don’t overlook the Patent Box, especially as it’s right on your doorstep!