Research and Development

Patent Box – a 10% tax rate as reward for innovation

  • Is any of your company’s income derived from a patented invention?
  • Does your company have any pending patent applications, or plans to submit a patent application?
  • Is your company undertaking a Research & Development (R&D) project or has it already completed a successful R&D project?

If your answer is yes to any of the above, you should consider the company’s current and future eligibility for the valuable Patent Box tax relief, accessing up to 15% tax saving on certain Intellectual Property (IP) related profits.

It may be that applying for patents is not a part of your current R&D strategy, perhaps because of the complexity of the process and the limitations of the protection it offers. It still may be worth exploring whether a simpler application could be made for a smaller component of the invention to gain access to the Patent Box regime.

It is never too early to start thinking about the Patent Box. Decisions made in the very early stages of the innovation cycle can affect the company’s eligibility for the Patent Box regime for the many years ahead.



4th October 2022





What is The Patent Box?

The Patent Box is a tax incentive designed to reward companies for driving innovation. Complementing the existing R&D tax relief schemes, it aims to encourage the development of new products and processes to boost economic growth in the UK.

It is a generous innovation tax relief which reduces the Corporation Tax rate to 10% on profits derived from UK and EU patents and certain similar IP rights. With the main Corporation Tax rate currently at 25%, this translates into an effective 15% tax saving on the relevant IP profits.

To be eligible, the company must:

  • own a qualifying IP right or have an exclusive licence over it, and
  • the IP-related profits must come on the back of the company’s (or group’s) own R&D efforts, whether the R&D led to the invention itself, or commercialisation or alternative application of someone else’s invention.

“OK, that sounds straightforward, how do I claim?”

The Patent Box claim is made on a back of an intricate multi-step calculation, and the relief is subject to highly complex legislative rules which are hard to navigate. Historically, this seems to have discouraged many companies and their advisers from making use of this relief. The Patent Box has been around since 2013 and so far, the uptake has been surprisingly low.

However, as always, with the right advice, accessing the Patent Box relief does not need to be a daunting task.

How can we help?

Whether you are a Patent Box veteran who needs support with transitioning to new rules, or a novice exploring your options for a new IP in development, our specialist team can provide tailored advice at any stage of the company’s innovation lifecycle, including:

  • Assessing your eligibility for the Patent Box
  • Determining the potential benefit of electing into the Patent Box
  • Advising on the optimal timing of the election
  • Assisting with the Patent Box calculations including identification of qualifying IP and revenue streams and developing cost allocation methodology, ensuring the benefits of the claim are maximised
  • Updating your Corporate Tax return with all relevant disclosures and submitting the Patent Box claim to HMRC
  • Assisting with transitioning from old to new Patent Box rules
  • Evaluating different operational structures and optimising or futureproofing these for the Patent Box
  • Putting you in touch with a patent attorney to discuss the viability of patenting your inventions to gain access to the Patent Box regime
  • Offering comprehensive innovation tax relief services, assisting you with both Patent Box and R&D claims.

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