A first glance through the Budget - and the 222 pages of notes produced by the Treasury - didn't look promising. But, tucked away in a press release produced by the Treasury and buried among pledges on child poverty and water competition, comes the news that:

"... the Government will consider the evidence for changes to the way the tax system encourages innovative activity and the relative attractiveness of the UK to global firms as they make decisions on where to locate their R&D and other innovation activities. Working with representatives across the business community, the Government will examine the balance of taxation of innovative activity, including IP. The Government will assess the evidence on the potential impacts of any reforms on economic activity, consult further with industry and set out its assessment and proposed approach before the Pre-Budget Report."

Translation: the Treasury is going to introduce consultation on the prospect of introducing an exemption from tax on royalties, along the lines of those already existing in the Benelux countries and Spain - Belgium, for example, taxes patent royalties at less than 7% as a result of this exemption. It may also have a look at other options but the Treasury has been exploring this for some time.

What does this mean? Any companies with substantial UK IP royalty income should consider getting involved in the consultation; the same goes for foreign companies who would consider the UK as an IP location if the tax position was more attractive - and these should be looking at Benelux as a possibility in any case.

Would you believe it? Tax incentives to innovate? Whatever next!