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Published 03/10/2022
Modified 31/01/2023
2 min read

HMRC Patent Box Statistics 2020-2021 | Innovation Tax

Innovation Tax summarise the key points and give expert insight on the data contained in HMRC’s 2020/2021 Patent Box statistics report.

HMRC Patent Box Statistics 2020-2021

Patent Box aims to create a competitive tax environment for companies to develop and exploit patents, supporting business investment and growth to retain the best technologies and inventions in the UK. Since scheme inception in 2013, nearly 10,000 claims have been made and over £7.4 billion in tax relief claimed.

If businesses have any pending or granted patents, they could be eligible for a significant tax saving, whereby profits from the patented products (and/or processes) will qualify for a reduced corporation tax rate of just 10%.

Innovation Tax summarises the key points from the provisional statistics released by HMRC covering the 2020-2021 tax year.

  • Projected figures show 1,535 companies claimed relief.
  • The number of SME claims increased by 15% to 1,155.
  • The total value of claims is estimated to be £1.2bn.
Projected figures for the tax year 2020 – 2021, grossed up to account for later returns, show that 1,535 companies claimed the relief, an increase of 10% on 2019-2020, with the total value of claims estimated to be £1.2bn a decrease of 1% on the 2019-2020 tax year.

Large companies accounted for 94% of the relief claimed

It is projected that large companies will make up 94% of the relief claimed, which would remain consistent with the 2019 – 2020 tax year, where large companies accounted for 95% of the relief claimed.

In 2020-2021 over half the companies claiming Patent Box tax relief were in the Manufacturing sector.

In the 2020 – 2021 tax year 52% of the companies claiming the relief were in the Manufacturing sector (including Pharmaceuticals). Projected figures suggest that the Manufacturing, and Professional, Scientific and Technical’ sectors will continue to make up the majority of both the number of groups claiming and the total relief claimed.

Patent Box by region

The number of companies claiming relief varies significantly across UK regions, with the highest number in the South-East at 16%, and the lowest in the North-East at 2%. There is also significant regional variation in the value of relief claimed, whereby companies in London claimed the largest amount of relief at 50%.

Uptake on Patent Box by SMEs still very low in comparison to the number of innovative SME companies claiming under the R&D tax credits scheme.

This is due primarily to a lack of awareness and understanding about the scheme itself, and how intellectual property may be used by a business to effectively leverage both commercial and tax strategies.
 
View the full HMRC Patent Box Statistics 2020-2021 here: Patent Box relief statistics: September 2022 – GOV.UK (www.gov.uk)

As a general principle, if you or your clients are claiming R&D Tax Relief, then Patent Box eligibility should be reviewed at the same time, preferably using a firm such as Innovation Tax who specialise in both Intellectual Property and Patent Box legislation as well as the R&D tax credit scheme. To learn more about the Patent Box incentive, visit our services page: Patent Box Claim - Patent Box Tax Relief - Innovation Tax

HOW CAN WE HELP?

At Innovation Tax, we dedicate time to our clients and partners to inform them of changes and new developments which may be of interest and go over and above expectation to demonstrate that we are not just R&D Tax experts.

Start the conversation with a complimentary, no-obligation chat about your R&D work.

Innovation Tax specialise in helping companies access vital innovation tax incentives and grant funding to enable their businesses to grow, increase profitability, reduce risk and enable further investment in R&D, IP and capital assets.

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