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)