I’ve been asked a few times since last Thursday’s referendum what the implications might be for the UK’s R&D and Patent Box regimes.

In terms of negative implications, the answer is that there really shouldn’t be any. Both of these reliefs are UK domestic reliefs contained within UK tax legislation and they do not rely on the EU for their continued existence.

Indeed, there might even be some positive implications. The SME R&D relief is, as most people are aware, an EU State Aid. This means that the UK Government needs approval from the European Commission (EC) before it can implement any changes. It has also resulted in certain provisions being incorporated into the UK R&D legislation at the insistence of the EC – the €7.5m project aid cap and the restriction on relief for projects also in receipt of another State Aid, for example. It is quite possible that, following formal departure from the EU, the UK Government will be able to remove those restrictions it felt were no longer desirable.

The definition of an SME for R&D purposes is based upon the EC definition (which is why the financial limits are in Euros rather than GBP). There are aspects of the detail of that definition that have caused debate over the years as it uses terminology which isn’t always easy to directly translate into UK terms. It is possible that the Government will take the opportunity to reposition the definition in clearer terms. At the very least, it is probable that the financial limits will be redefined in GBP.

It is worth noting, however, that this analysis does depend on the results of the negotiations that will take place with the EU as part of “Brexit” and the nature of the UK’s future relationship with the EU.


As far as the Patent Box is concerned, the analysis is broadly similar. Again, it is UK legislation and should be unaffected by any withdrawal from the EU. It is true that the Government has been required to amend the Patent Box regime – with legislation included in this year’s Finance Bill – but this is an OECD/G20 issue.


So there is no reason not to be considering these valuable reliefs.