Patent Box – new legislation published

April 2016

The 2016 Finance Bill has been published and contains legislation (at Clause 60 and schedule 9) amending the Patent Box rules, see here .

The new patent box legislation takes account of comments received and ensures compliance with the new international framework for tax favoured IP regimes set out by the OECD in October 2015.  Profits qualifying for a reduced rate of corporation tax will be determined by reference to a company’s direct engagement in R&D. The changes will generally have effect from 1 July 2016.

From an IP perspective, the changes from the draft version published in December 2015 include more detailed rules about how income from products that are protected by both ‘old qualifying IP rights’ (that may allow the company to use the old Patent Box regime during a transitional period) and ‘new qualifying IP rights’ (that should be subject to the amended new Patent Box regime) will be treated. 

Our detailed analysis of these rules and how the timing of patent applications and filing strategies can affect the benefit that can be obtained will follow.