The so-called “Patent Box” scheme was introduced last week. It allows businesses to cut the amount of corporation tax they pay on profits generated by UK owned intellectual property by 10 per cent.
Small businesses are being warned not to miss out on the chance to use their inventions to qualify for generous tax breaks in a move designed to make the UK a tax haven for innovators.
The giant companies will definitely take advantage and benefit. GlaxoSmithKline has indicated that it will bring some £500m of investment into the UK as a result of the tax break, including a new manufacturing plant in Cumbria, a move which is expected to create around 1000 jobs. There is concern that British firms will not benefit as much as foreign companies and that not enough smaller businesses will take advantage of the break.
Brompton Bicycle, the folding bike manufacturer, is an example of a smaller company expecting to capitalise on the patent box. The business, with an annual turnover of £16.7m, expects to save £132,000 and take on a new employee as a result of the scheme.
David Gauke, Treasury Minister said, “There are lots of businesses that can benefit – we’ve got a very good message in terms of business tax and it’s important that companies are aware. If you put the Patent Box alongside R&D credits (which allow companies to write off research costs against their tax bills) we now have a very attractive regime for innovative businesses. That’s going to be crucial for the knowledge economy that we need to stimulate”.
Innovators – take advantage!
