I don't have any desire (or ability) to dispense accounting advice so I won't attempt to do so (much to the relief of our PI insurers, no doubt). However, this blog wouldn't be complete without a few numbers, so suffice it to say that the new regime will be phased in from April 2013 and once it's in full effect (from April 2017) the rate of Corporation Tax to be applied to the relevant profits will be 10%.
As with any of these things, much of the devil is in the detail of the legislation but if you're a UK company and you generate profits either from an owned patent, an exclusively licensed-in patent, a partnership, a joint venture or cost-sharing arrangement or income from the sale of a patent, then you should be able to qualify for the lower tax rate. You also need to be able to show that either the patent holder (or another company in your group) has significantly developed the patented invention. If the development was done by a group company other than the patent holder, the holder must also be actively involved in the decision-making connected with exploiting the patent.
Estimates have suggested that the cost to HMRC of the new tax break could be as much as £1bn (although the effect of protecting UK jobs and hopefully preventing companies from moving offshore should ultimately outweigh those costs). In any event I hope that the old chestnut of the UK inventing things and other countries then making money from them may be consigned to history.