Expected rise in corporation tax could amplify the benefits of the Patent Box regime

The UK Budget, due next week, is widely expected to raise corporation tax from 19% to 25% over the next few years.

The Patent Box tax break allows UK companies to pay a reduced corporation tax rate of 10% on income from patented products.

The expected increase in corporation tax would significantly shift the cost-benefit analysis in favour of filing patents. Any costs associated with obtaining a patent portfolio would presumably be offset by the greater savings on offer.

We have already seen that the Patent Box is not just for the the largest blue-chip companies. The benefits are also substantial for many of our SME clients.

It remains to be seen whether the Patent Box regime itself will be adjusted in the Budget. There are rumours are of a simplification to the system- many will recall that pressure was put on the UK Government under EU state aid rules, which are less of a concern post-Brexit.

Whatever happens, the Patent Box should be on the radar of innovative companies looking to reduce their tax burden.


Nick Bennett

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