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Finance Act 2012

Chapter 1: Reduced Corporation Tax rate for profits from patents etc

4.New section 357A(1) outlines an elective regime to provide for a reduced rate of corporation tax for profits from patents and other specified intellectual property for qualifying companies.  Under new section 357G(4) the election applies to all of the company’s trades.

5.Where an election is made, new section 357A(2) gives effect to that election not by applying a reduced rate of tax to eligible profits directly, but by granting a deduction from trading profits of such an amount as has the same effect as reducing the main rate of corporation tax on eligible profits to the special IP rate.

6.New section 357A(3) provides the formula for calculating the amount of the deduction.

7.New section 357A(4) sets the special IP rate of corporation tax at 10 per cent.

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