THE UK is to change the design of its Patent Box regime to comply with new international standards set out by the OECD, the government has said.
‘Necessary changes’ to the tax incentive for intellectual property and research and design work will be introduced following a new consultation, which looks at the OECD’s ‘nexus principle’ – whereby businesses should only benefit from a preferential tax regime when the R&D expenditure takes place in the country of the regime.
The UK’s Patent Box Scheme came into effect in April 2013, allowing companies tax relief on any profits earned from their patented inventions. The scheme applies to patents granted by the UK Intellectual Property Office and European Patent Office. Of note, the consultation states that to date 639 companies have benefited to the tune of £335m of tax savings.
Reassurance on the future of the UK’s Patent Box Scheme is positive news for UK companies, according to leading intellectual property firm Withers & Rogers.
Michael Jaeger, patent attorney at Withers & Rogers, said: “The government has now made its position on the Patent Box Scheme clear, which is very important for UK businesses and innovation. This should remove any doubt for companies who undertake their R&D activity in the UK, allowing them to receive the same level of tax relief on patented technologies.”
In November 2014 changes to the UK’s current patent box regime were made in a concession to German concerns about artificial shifting of profits between European countries.
“Since the joint UK-German statement on amendments to Preferential IP Regimes, such as the UK Patent Box Scheme, was issued last November, we’ve heard very little about the extent of the changes which had caused some initial concerns. There were worries that the rate of tax relief enjoyed by many UK companies would be cut off at short notice.”
The government’s draft legislation on the UK Patent Box Scheme will be published in December and a response to the consultation also announced in spring 2016, including any necessary further changes.