Patent Box

What is Patent Box?

The Patent Box Scheme aims to create a competitive tax environment for companies to develop and exploit patents in the UK, supporting business investment and growth. It is a key element in the Governments’ Growth Plan to provide additional incentives in order to develop, commercialise and retain the best technologies and inventions in the UK.

Where a patent has been granted, even where the patented element is minor, all profits arising from product revenues should qualify providing a written election requesting clearance to claim is made to HMRC.

If your business has any pending or granted patents, you could be eligible for a significant tax saving, whereby profits from the patented product (or process) will qualify for a reduced corporation tax rate of just 10%.

And whilst a granted patent is required before any benefit can be claimed, seeking election whilst an application is ‘pending’ means the reduced tax rate can be applied retrospectively to profits generated during the ‘pending’ period since the election was made, up to a maximum of six historic accounting periods.

Granted Patents

Audit of patent portfolio
Make a retrospective claim for the last two financial years
Patent Box scheme election
Make a PB claim
Receive your tax benefit within 42 days of claim submission

Pending Patents

Patent Box Scheme election
Audit of patent portfolio
Track patent income
Make a PB claim
Benefit will be received when the patent has been granted

I do not have any patents

Audit conducted by our IP team
Patent attorney to advise on likelihood of successful patent
Prepare patent application
Submit and manage ongoing IP
Make a PB claim
Benefit will be received when the patent has been granted

Qualifying IP Income

Worldwide income from the sale of product which incorporates a patent, including spare parts
License fees or royalties from qualifying IP
Any compensation income or damages from the infringement of owned rights
The sale and disposal of qualifying IP and rights

What is it worth?

The specialist IP team at Innovation Tax will work with you to assess your entitlement and claim the tax relief on your behalf by;

Identifying qualifying Patent Box product(s) and/or process patent(s)
Mapping sales by qualifying / non-qualifying IP and advise on the potential to maximise the % proportion of qualifying sales
Electing you into the Patent Box scheme
Reviewing prior R&D Tax Credit claims, so identifying opportunities to maximise relief under both schemes
Compiling and submitting your Patent Box claim reports to HMRC
Agreeing your claim with HMRC and obtaining your tax benefit

£2.7b

Total amount of paid
out since inception of
the scheme in 2013

4,150

Total amount of claims
made since inception of the
scheme in 2013

£940m

Total amount of benefit
claimed in the 16-17 period

£44k

Current average claim
for SME’s

£3.2m

Current average claim for
Large Companies

The full Patent Box Statistics are released each year in September and can be viewed on the following link:

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