25% jump in amount of corporation tax saved by businesses through Patent Box scheme
The amount of tax relief claimed by businesses through the Patent Box scheme jumped 25% last year* to a record high of £942.5m, up from £754.3m in 2016, as more UK businesses invest in research and development (R&D), says Moore Stephens.
Moore Stephens says that patent tax relief is doing its job in encouraging UK businesses to invest more in R&D and building up their patent portfolios.
Patents help ensure that a business’ innovation is protected from being used by a competitor without payment. Historically UK businesses have been seen as good at coming up with new innovations but poor at exploiting them.
Moore Stephens says the Patent Box scheme should help reduce the innovation gap between the UK and other countries through promoting investment in R&D by UK businesses. Businesses in the UK currently invest the equivalent of 1.7% of GDP on R&D, two-fifths less than the OECD average.
The UK is far behind competitor countries in the number of patents filed. The UK filed only two global patents for technology related to blockchain in 2017, whilst China filed 226 and the US 91.
Introduced in 2013, the Patent Box allows UK businesses to pay just 10% corporation tax on profits from UK or EU patents.
As UK businesses continue to move up the value chain by investing in R&D and building up patent portfolios is increasingly important.
Herve Mottais, director at Moore Stephens says: “The Patent Box helps UK businesses get ahead of the pack and stay ahead of the pack. Increased investment to create high quality innovation is good news not just for businesses but for the UK economy.”
“Not only do patents act as a barrier to entry against competitors but they can be a source of income from licensing and an asset that can borrowed against or resold.”