The BIA welcomes the introduction today of the Patent Box which will allow innovative companies in the UK to benefit from a reduced corporation tax rate. The BIA also welcomes the introduction today of an above-the-line R&D tax credit of 10% for larger companies.
Steve Bates, BIA Chief Executive Officer, said:
“Today the UK is an even more attractive place to start a life sciences company as the Patent Box and 10 percent rate of above-the-line R&D tax credits come into force.
“The introduction of the Patent Box will provide an incentive for companies – including those in life sciences – to exploit their intellectual property in the UK. The Patent Box should make the UK a prime location for investment in R&D and manufacturing. The BIA has been actively involved in discussions about this new fiscal incentive since 2009 and warmly welcomes its coming into force.
“The Patent Box, when combined with the improvements to R&D tax credits and reduction in corporation tax, the government’s Strategy for UK Life Sciences and programmes such as the Biomedical Catalyst and the UK’s strong science base, helps make the UK a globally competitive location for life science companies.
“I would like to thank the government on behalf of UK biotech companies for these measures and for continuing the long-term, all-party support for the life sciences sector that is vital for its success.”
The Patent Box was first proposed to government in the BIA-led Review and Refresh of Bioscience 2015 in January 2009. It was then further developed under Lord Drayson at the Office for Life Sciences and taken forward and delivered by the coalition government in its 2012 Finance Bill. The BIA, alongside its members, was actively involved with government during several rounds of consultation on the proposed legislation working to ensure the final product worked to incentivise innovative UK research and development.
HM Treasury estimates the Patent Box, which will apply a 10% rate of corporation tax to profits from patents and certain other forms of qualifying intellectual property, will save British businesses £1 billion in corporation tax. It will also provide benefit to companies further up the development ‘pipeline’, applying to royalties and milestones, adding further value to innovative bioscience companies and encouraging their location in the UK.
Following the announcement of the Patent Box, GlaxoSmithKline committed to investing £500 million in manufacturing facilities in the UK, including £350 million in building a new biopharmaceutical manufacturing facility in Ulverston, Cumbria. The Patent Box also played a significant role in AstraZeneca’s decision to move its small-molecule R&D from Alderley Park to Cambridge rather than to the US.
The Patent Box and changes to the R&D tax credit system complement other measures to make the UK an increasingly competitive nation for inward investment: corporation tax has been reduced to 20% for SMEs and for larger companies has fallen from 28% to 24% and will fall to 20% over the next two years; additionally the SME R&D tax credit relief has risen to 225 percent of costs and the PAYE/NI cap has been removed.