Making corporate taxes more competitive

Supporting detail:

Innovation and investment

Patent Box

The Patent Box was set out in the Corporation tax road map and confirmed in the 2010 budget. It gives a reduced 10% rate of corporation tax on profits from patents.

In November 2010 we ran a consultation on the measure as part of wider consultations on corporate tax reform. We ran a second consultation in June 2011, and then consulted on the draft legislation in December 2011. It came into effect in April 2013.

The Patent Box will encourage innovative businesses to invest in the UK and will improve the competitiveness of the UK tax system for high- tech companies.

Research and development tax credits

We believe that research and development (R&D) tax credits play an important role in supporting innovation in the UK.

Following consultations with a number of large companies on R&D tax reliefs we announced at autumn statement 2011 an ‘above the line’ credit to provide a £250 million per year boost for companies.

At budget 2013 we announced the credit would be available at 10 per cent. This came into effect in April 2013.

This will increase the visibility of R&D relief, and improve finances and cash flow for companies with no corporation tax liability.

Around 2,450 companies will benefit from the relief.

Tax reliefs for creative industries

The UK is a world leader in the production of animation, high-end TV and video games. To make sure that UK businesses receive the right support to maintain this status, we announced tax reliefs for these sectors in the 2012 budget.

Relief for animation and high-end television industries came into effect in April 2013, with video games following in April 2014.

By 2017 to 2018 companies in the creative industries will benefit from over £100 million in new tax reliefs, which will be among the most generous in the world.

At Autumn Statement 2013, we announced plans to introduce a new support for theatres from April 2015 that recognises the unique value that the theatre sector brings to the UK economy.

Helping companies invest in plant and machinery

At autumn statement 2012 we announced an increase in the annual investment allowance from £25,000 to £250,000 for two years from January 2013.

This will accelerate the tax relief a business can get on expenditure on qualifying plant and machinery up to £250,000.

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