Businesses should “get to grips” with new Patent Box rules or risk missing out on corporate tax relief, a major regulator has warned.
The new guidance, published by the Institute of Chartered Accountants in England and Wales (ICAEW), comes after grandfathering rules for the original Patent Box regime came to an end last month.
Launched in 2013, the Patent Box scheme incentivises companies to keep and commercialise intellectual property in the UK by offering a lower rate of Corporation Tax (10 per cent) on profits generated from patented inventions.
But critics said the regime could be “potentially abused”, leading to the introduction of new rules from 2016 onwards. But existing claimants could benefit from grandfathering provisions to remain under the “old regime” until 30 June 2021.
The deadline has now passed, however, meaning all claimants are required to comply with the “new regime”.
Under the new rules, claimant companies are required to track income, expenditure, and research and development (R&D) investment in “greater detail”.
The new regulations also apply a “nexus” principle. This requires an R&D fraction to be calculated for each type of intellectual property asset, product or product family to which relevant income is attributable.
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