Corporate Magazine - 2013, June (PDF) - Invest Northern Ireland

10 June 2013 InvestinFocus on R&D and InnovationR&D and theRed BoxNew measures announced in the Budget aim to deliver short-term gains tobalance the long-term investment that is often involved in R&D projects.Carol Keery, Invest NI’s Director of Research and Development, explains.In his 2013 Budget the Chancellor,George Osborne, confirmed a rangeof measures that aim to provide anincentive for companies to undertakeR&D and innovative activity. Theyinclude the implementation of specificreliefs designed to target and producethe greatest benefit.Whilst many of the measures aren’tentirely new, the package does includeenhancements to HMRC’s alreadyestablished R&D Tax Credit regime andthe implementation of the Patent Box,as previously headlined in Budget 2012.The Chancellor also confirmed theimplementation of an ‘above-theline’credit for qualifying expenditureincurred on or after 1 April 2013(first announced in the AutumnStatement in 2011).As a package, these measures firmlyunderline Government’s commitmentto creating the right environment toenable R&D companies to prosper.For the first time the relief focuses onpatents, because they are stronglylinked to ongoing high-tech R&D andmanufacturing activity which is aGovernment priority.The Patent BoxBusinesses are increasinglyfocusing on building andprofiting from creatingand exploiting intellectualproperty. To furtherencourage this, the PatentBox has been developed as away of giving a tax benefit onprofits arising from patents.The Patent Box will allow companiesto apply a 10 per cent corporation taxrate to profits earned after 1 April 2013that are attributed to patents and certainother similar types of intellectual property.It will apply to worldwide income fromexisting as well as new patents, andbusinesses will be able to benefitwhether their patents are licensed,included in patented products, usedin internal processes or to provideservices.The Patent Box is therefore expectedto benefit a large number of innovativecompanies, encouraging them toretain existing patents and invest indeveloping new patented technologiesin the UK.It will also benefit the economy as itwill encourage companies to locate thehigh-value jobs and activity associatedwith the development, manufacture andexploitation of patents, in the UK.The Patent Box will enhance thecompetitiveness of the UK tax systemfor high-tech companies that obtainprofits from patents. In short, it willreward successful innovation.As well as our indigenous, localcompanies, overseas multinationals areextremely interested in the Patent Boxand the benefits it offers them. Thisincreases the attractiveness of locatingin Northern Ireland.