What is the ‘Patent Box regime’?

The aim of the Patent Box regime is to "provide an additional incentive for companies to retain and commercialise existing patents and to develop new innovative patented products". It follows in the footsteps of other, similar regimes in Belgium, Luxembourg, the Netherlands and Switzerland.

Following a lengthy consultation, in which Smith & Williamson took part, the new legislation has been included in the Finance Bill 2012.

From 1 April 2013, companies will be able to elect to phase in a reduced rate of corporation tax to profits generated from qualifying patents and limited other forms of intellectual property (IP). Ultimately the rate will fall to an effective 10%. Transitional rules will phase the benefits in, with 60% of the rate reduction being available from 2013 and the full reduction from 2017.