Effect of the rise in corporation tax on companies’ use of intellectual property

The recent rise in corporation tax makes patent box relief relatively more generous for innovative companies looking to commercialise their intellectual property. However the rebalancing of research and development (R&D) tax relief to favour larger businesses could discourage R&D investment by small and medium sized enterprises (SMEs) reducing the number of companies generating profitable intellectual property in the future and ultimately diminishing returns for the UK economy.

Glint of silver in the cloud?

Dubbed the ‘week of woe’ by some business groups 1 April 2023 saw UK companies facing reduced government subsidies on energy bills a less generous ‘rebalancing’ of the R&D tax relief rates for SMEs and perhaps more significantly a rise in the main rate of corporation tax from 19% to 25%.

While the corporation tax rate increase trailed by the chancellor for some time was no surprise it was...