Published 13 June
The expected consultation documents on the Patent Box and Research and Development (R&D) tax credits have now been published.
The Patent Box will apply a 10% corporation tax rate to profits attributed to patents from April 2013. The document consults on detailed proposals for the new system’s implementation, and gives further information about which patents and associated types of intellectual property will be included, and what income will be eligible for the lower rate. The intention is to provide an incentive for companies in the UK to develop new innovative patented products whilst retaining and improving existing patents to become more commercial.
The proposals in the R&D tax credits consultation are intended to simplify the scheme by, among other things, extending the credit so that the costs of more contract workers qualify for relief.
In order to assist in planning, a process will also be piloted which will allow small companies and start-ups to apply, at an early stage, for advance clearance on whether particular projects will qualify for the credit.
The government will also explore the possibility of moving to an ‘above the line’ credit; i.e. a credit against the company’s corporation tax bill (payable to the company to the extent that it exceeds that bill) rather than an enhanced deduction in arriving at taxable profit.
The R&D document also includes the government’s response to the points raised by respondents to its previous consultation on this subject, which were considered by the government when putting together the measures announced at Budget 2011.
Responses to both consultation documents are invited by 2 September 2011.
For more information please contact Jacquelyn Kimber, Andrew Jones or your nearest Moore Stephens business tax adviser.