HMRC Patent Box Statistics 2020 – Innovation Tax

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.

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%.

Key Points

  • 7% increase in the amount of support claimed to just over £1.1billion
  • 10% increase on the number of companies claiming the relief (1,305)
  • 56% of claims were made by manufacturing companies, accounting for 30% of relief claimed
  • 47% of relief claimed was by London-based companies
  • 92% of relief claimed by large companies
  • 34% of relief claimed by 10 companies in the ‘Financial and Insurance’ sector

In 2017-18, 1,305 companies claimed relief under the Patent Box, and the total value of relief claimed was £1.1bn.

So far in 2018-19, 1,230 companies have claimed relief under the Patent Box, with a total value of £992 million; these figures are expected to be revised upwards when more data becomes available.

If the proportion of late claims is in line with previous years, the total claim value for 2018-19 is likely to be around £1.13bn.

The value and volume of Patent Box claims by company size

Company size breakdowns based upon EU Enterprise Size Classification.

Number of companies claiming Patent Box relief in 2017-18 by industry sector, as based upon the Standard Industrial Classification (SIC) 2007.

The value and volume of Patent Box claims by UK region.

Geographic breakdowns based on UK Government Office Regions and per taxpayers’ address given to HMRC for tax purposes.

The aim of the Patent Box is to provide additional incentive for companies to:

  • Increase the level of patenting of IP developed in the UK and to ensure that new and existing patents are further developed and commercialised in the UK;
  • Manufacture and sell those innovative products and services from the UK; and
  • Locate the high-value jobs associated with the development, manufacture and exploitation of patents in the UK.

Uptake on Patent Box is still very low in comparison to the number of companies innovating and carrying out Research and Development activities in the UK and there remains a lack of awareness and understanding about the scheme itself and how intellectual property may be used to leverage both commercial and tax strategies. 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 who specialise in both Intellectual Property and Patent Box legislation. The full Patent Box Statistics can be viewed here

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

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