Patent Box Tax Relief: Eligibility, Benefits & How to Claim

Unlock Tax Savings on Profits from Patents, Inventions and IP

If your business has developed innovative products or holds patents, you could be missing out on a major tax break. The Patent Box scheme allows eligible UK companies to pay just 10% Corporation Tax on profits linked to patented inventions.

But here’s the catch: many companies don’t even know this relief exists — or that they qualify.

What is Patent Box Relief?

Patent Box is a government-backed tax incentive that reduces the effective Corporation Tax rate to 10% for profits earned from patented technologies. It encourages UK businesses to develop, commercialise and retain intellectual property (IP) in the UK.

Since it was introduced in 2013, thousands of companies have claimed over £1 billion in tax savings — but many more are missing out.

In 2021/22, HMRC estimates 1,510 companies participated, receiving £1.36 billion in tax relief. While participation has recently plateaued, with only a slight increase in relief claimed, the rising corporation tax rate from April 1, 2023, is expected to drive increased usage.

Given the approximately 90,000 Research and Development (R&D) tax relief claimants and over 20,000 annual patent applications at the UK Intellectual Property Office, many companies developing and commercialising IP appear to be missing out on potential Patent Box benefits.

Do I qualify for Patent Box Relief?

To qualify, you must be able to answer YES to at least one of the following:

• Do you hold a patent?
• Do you have a pending patent?
• Have you purchased a patent from a 3^rd party upon which you have continued development?

It’s important to note that even if you meet one of the above criteria, profitability is a key factor.  The Patent Box scheme is designed to reward companies generating profits from their patented inventions. Therefore, if your business is currently loss-making, you won’t qualify for Patent Box relief.

Many businesses that claim R&D Tax Relief may also be eligible for Patent Box – but fewer actually make a claim.

How can Patent Box Relief help my business?

Patent Box relief can significantly boost your bottom line. This scheme slashes the effective Corporation Tax rate on patent-related sales to just 10% – a huge advantage, especially for companies facing the 25% tax rate. If you’ve taken the crucial step of protecting your intellectual property (IP), this incentive can be incredibly lucrative.

The financial advantage your business gains from the Patent Box scheme hinges on the proportion of your profits derived from your patents.

With the Corporation Tax rate increase from 19% to 25% on April 1, 2023, Patent Box provides a substantial tax reduction for eligible companies, lowering their Corporation Tax liability.

Recently, we worked with a client to make an application for Patent Box Tax Relief, we identified £192,262 of Patent Borne profits, resulting in a tax saving of £27,132.

It sounds like there is a lot of work involved, how can A4G support me?

Navigating the complexities of the Patent Box scheme, both in legislation and application, can be challenging.  Expert guidance is essential to avoid mistakes and maximise your claim.  A4G specialises in helping innovative companies like yours secure Patent Box tax relief.  Our comprehensive process handles the entire application, freeing you to focus on future innovation and growth.

A4G’s service could include, but is not limited to:

• A 2-hour initial meeting, to assess your IP position and discuss your associated costs.
• A review of your financial records, outlining an estimate as to the relief you could expect to receive following a successful application.
• Communicating with HMRC on your behalf ensuring that you have available any relevant documentation that you would need to present in the unlikely event of an enquiry.
• Drafting of all relevant declarations and pro-forma
• Completing the necessary adjustment to your Company Tax Return
• Filing of the CT600 on your behalf
• Regular updates as to the status of your repayment
• Dealing with any subsequent communications with HMRC
• Advising on improvements that could be made to your records for future years claims.

Additionally, each of our Patent Box clients are subscribed to our Tax Protection Service at no extra cost, to give you peace of mind that in the unlikely event of an enquiry, our time spent in helping you through it will be covered.