The UK gave away £342.9 2 million (USD 452.6 million) in tax breaks, mostly to large corporations, through its patent box tax incentive the first year the program was established, data released today by HM Revenue and Customs has revealed.
The patent box tax scheme, effective from April 1, 2013, applies a reduced 10 percent corporate tax rate to profits attributable to patents and other forms of intellectual property through a scheme that grants qualifying companies extra deductions. The tax break is designed to encourage companies to locate operations in the UK.
Data released for tax year 2013–14 shows that 700 companies took advantage of the patent box, with 80 percent of those firms being in the manufacturing and wholesale & retail and transport sectors.
While only one third of the companies applying for relief were large firms, those firm, by far, claimed the greatest tax benefit. The data shows that large firms received £327.2 million (USD 431.9) in tax breaks in 2013–14, or 95.4% of the total.
Large firms are defined as those with turnover exceeding €50 million (USD 56.1), assets exceeding €43 million (USD 48.2), and employees numbering more than 250.
This is the first time HMRC has provided data on the use of its patent box tax break. It intends to produce this data annually.
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