The UK government has announced a ‘patent box' tax incentive, whereby profits attributable to patents will be taxed at 10% rather than the standard corporation tax rate, which is currently 28%.
The initiative is now open to consultation and we have made submissions to the government on a range of issues such as whether the proposal extends to foreign patents held in the UK and how to establish the value of embedded income for purposes of the lower tax.
We anticipate the tax break will apply once a patent is granted and may be back-dated to first commercialisation.
We believe the potential benefit is already running. Technology companies who pay UK tax may have the opportunity to save a great deal of money by filing patent applications now.