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Get to grips with the new patent box rules


Published: 09 Aug 2021 Update History

Grandfathering rules for the original patent box regime came to an end on 30 June, meaning claimants must now track income and expenditure in more detail to claim. The Tax Faculty is hosting a webinar on 26 August to help its members understand the implications.

In 2013, the UK introduced the patent box tax relief regime aimed at boosting innovation and encouraging companies developing intellectual property to remain in the UK. It currently enables companies using patented technology to claim for profits to be taxed at 10% rather than the main rate of corporation tax.

Following a challenge from the Organisation for Economic Co-operation and Development that the regime constituted a ‘harmful tax practice’, an amended regime was introduced from 2016 onwards and grandfathering provisions enabled existing claimants to remain under the “old regime” until 30 June 2021.

The rules now require all claimant companies to track income, expenditure and research and development (R&D) investment in greater detail, meaning additional information is needed at year end to prepare the necessary calculations.

The new rules also apply a “nexus” principle, which requires an “R&D fraction” to be added to the calculation, and potentially additional streaming of patent income and expenditure.

On 26 August, RSM’s Graham Steele, Partner, Innovation Reliefs and Will Rainford, Associate Director, Innovation Reliefs who have extensive experience of patent box claims, will be deliver a webinar explaining the changes. The webinar will be chaired by ICAEW Tax Faculty’s Richard Jones.

The RSM team will provide an overview of the patent box regime and explain the key differences between the old and new rules. They will also outline the steps that may be required for companies to “track and trace” profit and R&D expenditure for claims.

The webinar will start at 12:00 and is free for all Tax Faculty members and Faculties Online subscribers, you simply need to register to attend.

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