Reduced Tax Rates for Patent Income - January 2010

It is refreshing to report some good financial news for creative companies, SMEs and entrepreneurs with the Government’s announcement of a new “Patent Box” regime.

The UK Chancellor, Alistair Darling, recently revealed a new tax incentive for companies with an income derived from patents.  The UK Government is introducing a new 10% Corporation Tax rate on income from patents rather than the current Corporation Tax rate of 28%.  The UK Government hopes that this significant incentive will encourage research and development and also stimulate activity in innovative industries. This significant reduction may be of benefit to many patentees with UK and/or European (UK) patents.

This new tax reduction is currently intended to apply from 2013.  However, since patent applications may take more than three years to be granted, this new tax rate may apply to patent applications being currently filed.  Applicants who currently have pending patent applications may want to try and delay the grant of any applications until the new rate comes into force.  There are several delaying tactics available to applicants which include the filing of an International (PCT) patent application, where possible.  In addition, those companies with existing successful products may want to consider filing new patent applications for future improvements on these products in order to try and benefit from this provision.

Overall, we recommend that companies review their Intellectual Property Rights in order to maximise their assets and also potentially decrease their tax burden.  If you would like to talk to Nick or find out any more information about Patents or Trademarks please do not hesitate to contact him on 01473 660600 or through the website.