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Taxation, work and welfare
Patent Box
Background
The Government is introducing a preferential regime for profits arising from patents, known as a Patent Box. This will allow companies to apply a reduced 10% corporation tax rate to profits attributed to patents and certain other similar types of intellectual property (supplementary protection certificates, regulatory data protection and plant variety rights).
The Patent Box will apply to worldwide income from existing as well as new patents. Patents are used in wide range of sectors, and businesses will be able to benefit however they use their patents – whether they are licensed, included in patented products, or used in internal processes or to provide services. The Patent Box is therefore expected to benefit a large number of innovative UK companies, encouraging them to retain existing patents and invest in developing new patented technologies in the UK.
The Patent Box will encourage companies to locate the high-value jobs and activity associated with the development, manufacture and exploitation of patents in the UK. It will also enhance the competitiveness of the UK tax system for high-tech companies that obtain profits from patents.
The Patent Box will be available from April 2013. The full benefits will be phased in over the first five years.
Update on the Patent Box
On 29 March 2012 the Government published legislation for the Patent Box as part of Finance Bill 2012. On the same day, HMRC published an updated technical note which provides guidance on the implementation of the new regime.
- The Bill is available on the Parliament website (external link, opens in a new window) the Patent Box legislation can be found at Clause 19, Schedule 2.
- The Technical Note (HMRC website, opens in a new browser)
Closed consultations
The Government is grateful for the engagement of businesses, representative bodies and other stakeholders during the consultation process. Technical changes have been made to the regime as a result of each stage of the consultation, which have resulted in a more accessible and competitive regime.
Stage 3: Technical consultation on the draft legislation
On 6 December 2011 the Government published its response to the June 2011 consultation. The Government also published draft legislation on the Patent Box, together with draft Explanatory Notes and a Technical Note. Technical consultation on the draft legislation and accompanying documents closed on 10 February 2012.
- Patent Box: response to consultation (PDF 338KB)
- The Technical Note (PDF 164KB) (HMRC website, opens in a new browser)
- Draft clauses, explanatory notes, draft statutory instrument and explanatory memorandum (PDF 456K) (HMRC website, opens in a new window)
Stage 2: Detailed policy design
On 11 June 2011 the Government published a Consultation on the Patent Box, which covered the detailed scope and proposed design of the Patent Box.
Stage 1: Objectives and policy options
On 29 November 2010 the Government published the Corporate Tax Road Map, This document set out how the Government intended to work with business to enhance UK tax competitiveness. Part 2B of this document covered the role intellectual property plays in the Government’s ambitions for the corporate tax system, including the proposals to introduce a Patent Box.
Stakeholder Relations
Open Event
Thanks to all those who attended the open event on 10 January 2012. The presentation given at the event is available to download:
Distribution List
If you are not already on the distribution list and would like to be informed of Patent Box updates then please email: corporatetaxreform@hmtreasury.gsi.gov.uk
Working group
A Working Group of representatives from businesses was established to complement wider consultation on the Patent Box and to discuss options and proposals in more detail. A list of current members is provided below.
- Helen Jones – GlaxoSmithKline
- Mike Sufrin – retired - formerly Rolls-Royce
- Gerd Koenigsmann – Eisai
- Sarah Carter – Syngenta
- Andy Wood – Shell
- Martyn Smith – Dyson
- Michele Nash – Arm
- Peter Denison-Pender – Fusion IP
- Colin Dalton – Vectura
- Valerie Thorn – AND Technology Research Ltd
Contact us
If you would like to share your views on the Patent Box please email: corporatetaxreform@hmtreasury.gsi.gov.uk
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