The Patent Box
The Chancellor's Autumn Statement on 29 November 2010 included promising news for all innovative businesses involved in research and development.
The Statement saw the Chancellor commit to a consultation on the proposed introduction of the eagerly awaited "Patent Box" scheme. If the Patent Box scheme is introduced, profits resulting from the exploitation of patents will be taxed at a preferential rate of 10%. Profits taxed at the preferential rate will include profits from royalty income as well as "embedded" income included in the price of patented products.
If the scheme is approved following the consultation, it will be introduced from 1 April 2013 but will apply to patents first commercialised after 29 November 2010. The proposal forms part of Government plans to encourage innovation and patenting in the UK and consequently strengthen UK business and the economy.
In view of the fact that the scheme will only apply to granted patents - not to patent applications - that are first commercialised after 29 November 2010, it would be prudent to consider filing patent applications for your innovations without undue delay as this should increase the likelihood of obtaining grant of the applications by 1 April 2013. Those waiting until the legislation comes into force to take action will face significant delays between the scheme coming into force and them becoming eligible for it.
Review of Research and Development Tax Credits
In addition, the consultation will include a review of R&D tax incentives to ascertain whether any further specific costs should be brought within the scheme to encourage innovation generally and also to encourage investment in the research and development activities of SMEs. These changes may spell further good news for all innovative business and could result in a broadening of activities that are eligible for the incentive, potentially reducing the cost of securing patent protection.
For more information on the proposed changes and how your business could benefit, please contact Withers & Rogers LLP:
Marisa Foster
Withers & Rogers LLP
Tel: +44(0)117 925 3030
Fax: +44(0)117 925 3530
