David Norton, tax partner at Deloitte, comments: "We warmly welcomed the proposal of the 'Patent Box' when it was announced by the Chancellor in his Pre-Budget Report in December 2009. The Chancellor reiterated the commitment in his speech today. However, the documentation has yet to be published and there will undoubtedly be a need for everyone to work hard if the new regime is to be introduced in Finance Bill 2011 as planned.

"The aim of the patent box is for a 10% regime to apply to patent income. A UK or European patent is likely to be a condition of the relief, even though worldwide income from the invention may qualify. It's clear that consideration will be given to requiring UK research (a similar requirement to the Belgian regime).

"Patent Box will be a boost to promoting innovation in the UK and a key beneficiary will be the UK's world class pharmaceutical sector. However, we are pleased that the regime will not just focus on life sciences. It will be important for other industry sectors to seize the opportunity afforded to locate additional activities here and increase the number of patents registered. They will also need to make sure that HM Revenue & Customs understands their commercial issues during the consultation period as there are many nuances and complexities that will need to be addressed in designing the new relief."

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