Patent Box

The measure

The Patent Box will allow companies to elect for an effective 10% rate of corporation tax for profits arising from the exploitation of patented technology. The Government published draft legislation on the Patent Box regime in December 2011 and has re-affirmed that the measure will be included in Finance Bill 2012, but did not give any additional technical detail.

The regime will apply to patents granted by the UK or European Patent Office and certain other European jurisdictions, the details of which will be published in summer 2012. The regime will also apply to other qualifying intellectual property rights such as regulatory data protection, supplementary protection certificates and plant variety rights.

Who will be affected?

Companies that receive income in the UK and hold a qualifying patent or an exclusive licence to use a qualifying patent. Income can be received separately as royalties, embedded in the sales price of products, from services or underlying processes.

The measure is intended to benefit innovative industries in general. Accordingly patent filers in pharmaceutical, technology, manufacturing, energy and utilities, telecoms, aerospace, defence, consumer and media businesses should benefit.

When?

A further draft of the Patent Box...