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PATEnT BOX


Forthcoming changes to the UK’s Patent Box regime


Kate Mitchell from PwC brings us an update on the UK’s Patent Box regime…


Having talked before about forthcoming changes to the UK’s Patent Box regime and the refinement of these proposed rules continues.


FUNDING


The Patent Box effectively provides a 10% rate of corporation tax for profits arising from patented technology and the Government has budgeted approximately £1bn per year to fund Patent Box claims.


However, the UK regime is more generous than other IP regimes as it requires only one patent in a product for the whole product to qualify. For example, a patented invention in an exhaust system is likely to result in the whole car qualifying for the relief.


IP REGIMES REVIEW


Following a review of all IP regimes by the OECD, a modified UK IP regime will be phased in from 1 July 2016 although companies have till 30 June 2016 (at the latest) to elect to stay under the old rules till 2020.


Many business structures commonly separate out IP ownership, R&D and trading activities, either globally or within the UK. However, the new regime, which has an increasing focus on substance at its heart, will limit benefits based on the proportion of relevant UK R&D undertaken as a proportion of overall R&D.


NEW APPROACH


This new approach potentially requires IP and R&D to be kept together, in the Patent Box claimant company. This is because Patent Box claims are potentially restricted by…


UK company R&D


Total group R&D


For some businesses, this will have almost no impact at all. For others, perhaps those who do undertake R&D in the UK but have significant IP offshore, their claims could be impacted substantially. Fundamentally, businesses are unlikely to be better off under the new proposals than under the current regime.


ACT NOW


We continue to encourage companies to act now to understand whether they can qualify for the current and/or new regime and the benefits of each.


Kate Mitchell Senior Manager International Tax PwC


Click to view more info


www.windenergynetwork.co.uk


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