April 2013 saw the introduction of the government’s much heralded “patent box” scheme. In essence, the scheme allows businesses to lower the amount of corporation tax that they pay on profits generated by UK owned intellectual property to as little as 10 per cent by 2017. Six months on, and despite criticism from Brussels, the government and HMRC are keen to ensure that it isn’t only big companies who are benefiting.
The scheme was introduced to encourage innovation by providing an incentive for companies to locate their high value jobs associated with the development, manufacture and exploitation of patents in the UK, and to maintain the UK’s position as a world leader in patented technologies.
Announced in the 2012 budget, the scheme met with overwhelming approval from businesses large and small. It was cited by GlaxoSmithKline as a driver behind their £500 million investment in the UK which includes building a manufacturing facility in Cumbria and expanding their operations in Scotland.
But this isn’t just about “big pharma”. The patent box regime may be applicable to your business if:
It is liable to UK corporation tax and it commercialises or develops new, innovative patented products; and
The business owns or exclusively licenses the patents, and has undertaken qualifying development on them.