Are you up to date with innovation incentives?
May 15, 2017
There is quite a period of change abreast in the UK, the world of tax and indeed for innovation incentives. For that reason, here is a timely reminder of a few recent changes and how they could impact your business.
Aligning R&D and new Nexus claims - Many companies make both R&D and patent box claims. Therefore it makes sense to streamline these two claim processes as far as possible. R&D work often precedes patent box therefore when preparing R&D claims for 2016 onwards, it is worth ensuring that data to support Nexus 'R&D fractions' is also collated in a suitable format at the same time.
Patent box - The patent box regime is transitioning to Nexus between now and 2021 with companies being required to track R&D costs from 1 July 2016. Companies that qualify for the old patent box regime before 1 July 2016 can continue to benefit from the old, and sometimes more favourable, regime for up to five years. There is still a window of time to elect in and some choices to be made regarding the old and new Nexus regime. Even if patent box claims haven't historically been a priority, the pending deadlines and your tax profile may now change this.
Nexus - Nexus based patent box claims essentially require intellectual property (IP), Research & Development (R&D) and income within a single legal entity. If you have historically separated out IP/R&D functions, you should seek to understand the potential impact and steps that can be taken to address this. Comparably, some companies may actually be better off under Nexus - could you be one of these?
Research & Development - don't get caught out by the changes to consumables/production costs, effective from 1 April 2015 - we are seeing HMRC asking more questions in this area.
Global claims - By optimising innovation funding, companies are able to invest substantially more in R&D at the same net cost to the business. We have both the deep global regime expertise and broad project experience within our international network to help companies develop their innovation strategy, optimise claims and make business decisions with available funding in mind.
For more details please contact me or your usual PwC contact.