In a move to make the UK more attractive as an innovation hub, the British government announced plans to ease the tax burden on revenue stemming from research-related patents. On 9 December, the Labour party unveiled its spending plans for the coming fiscal year with a prebudget report that included a lower rate of corporation tax on income from new intellectual property.

The so-called 'patent box' scheme, designed to take effect in April 2013, sets the corporation tax rate on patent income at 10%, down from the main rate of 28%. This initiative to encourage more pharmaceutical and biotech companies to base themselves locally echoes similar efforts introduced in other countries, including Belgium, the Netherlands and Switzerland.

“This is the first time where we've made a change to the taxation policy in the UK that makes a clear link with the location of intellectual property,” UK Science and Innovation Minister Paul Drayson told Nature Medicine.

“In the UK, we're really good at getting the patents in the first place, but we're not so good at turning them into products,” says Joseph Wildy, a spokesman for the London-based BioIndustry Association, a trade group that lobbied for the special tax regime. “We have to be a bit more cunning about how we attract investment and develop a vibrant environment for innovation, and this [tax plan] certainly helps that cause.”

The tax relief was called for last January in a report to the government by the industry-sponsored Bioscience Innovation and Growth Team, and it was part of the package of measures outlined in July by the government's Office for Life Sciences, which is led by Drayson. In addition to the patent box, the prebudget report also extends funding by £200 million ($325 million) for an emerging technologies investment fund, administered by the Department for Business, Innovation & Skills.

“We want to ensure that the production of patents, for example, around new therapeutic agents, will be translated into high-tech manufacturing that gets turned into jobs and economic growth,” Drayson explains.

Despite this year's upcoming election, the tax plan looks set to go forward. The opposition Conservatives, who have pledged to deliver an emergency budget within 50 days of coming to power if elected, are unlikely to oppose the patent measure.