The Patent Box lands in the UK on 1 April 2013 as part of the government’s bid to make the UK a more attractive and globally competitive place to do business.
I won’t dish out the detail of the patent box right now suffice to say that it will provide a lower rate of UK corporation tax for patent income (10%). The main rate of corporation tax is currently 26% and will be 24% at the time of the introduction of this new relief.
The patent box is not new – other countries have successfully piloted similar schemes (some EU countries with more attractive patent box rates than our proposed rate) and now the US is taking a serious look.
We already have the R&D tax credit in the UK to reward companies engaged in pushing the envelope of knowledge in the areas of science and technology although some 12 years post intro there are still many companies that are struggling to get to grips with this increasingly attractive tax incentive and many who have yet to make a claim (much to my frustration!).
HMRC recently held a meeting outlining the new patent box relief (slides here). I am not the only one left thinking that once companies have gone to the hassle of calculating the profits attributable to this lower rate, there may not be much eligible for the special 10% tax rate!
This is a good initiative but yet again the implementation of this tax incentive leaves a headache for companies and their advisors. What are your thoughts on what you’ve seen so far?
- Patent tax relaxed for smaller companies (telegraph.co.uk)