Placing innovation at the heart of the UK's economic build
Published: Tuesday 4 May 2021
Changing the narrative of the Patent Box scheme
The long-awaited Kalifa review looking at the UK fintech sector provided some crucial insights when it comes to continued innovation in the sector. The call to expand the scope of R&D tax credits to include financial data sets as qualifying expenditure is absolutely right and is testament to the UK government’s vocality around support for fintech. Drawing the same conclusion as the HMRC consultation last year regarding data on how the R&D process is used, it shows that research and development (R&D) and intellectual property (IP) are key drivers of success for UK fintechs.
Some of the most innovative players in the fintech space have considerable valuations and the only way they can be sure of meeting them is to generate longevity in their offerings. This is where IP comes into the equation. All too often, fintechs are not capitalising on their IP because they’re stopping short of using patents as a commercial tool. GovGrant’s Innovation Nation research found that although 84% of fintech leaders think it is important to secure patents for protection purposes, only one-third (31%) saw it as a priority to commercialise their IP.
We have to change this narrative.
Almost all R&D will create some residual IP value, and using this to their advantage allows fintechs to improve margins, sell more or engage better with potential clients. In turn, this can help to meet their valuations by bringing a tangible asset against which to attribute value.
If retaining value wasn’t a sufficient motivation to secure a patent, the UK government provides incentive in the form of the UK Patent Box scheme. It grants a long-term reduction in corporation tax on profits resulting from qualifying IP. This drives long-term, sustainable growth for both the business and the economy as a whole while sparking further ideas and progression within the fintech space. It’s an unmissable opportunity for UK fintechs.
GovGrant’s research collected the views of over 500 SME decision-makers across seven different industry sectors to understand the factors driving strategic decision-making around investment in innovation, including fintechs’ views around their IP.