The Patent Box

By electing in to the Patent Box, an innovative company can achieve a significant long-term reduction in its corporation tax bill.

A simple equation:

patent box profits + election = cash from HMRC every year for the life of the patent.

About Patent Box

Businesses are under immense pressure to produce innovative new products to keep up with the competition.

The Patent Box tax incentive is one of a number of measures to encourage innovation and is potentially one of the most generous tax incentives ever introduced in the corporate arena. It applies to innovative high tech companies and to companies that develop and use patents in their trade, such as manufacturing.

  • Patent Box profits are currently taxed at 10%, a 9% discount on the 19% rate
  • The discounted tax rate can be applied to all future profits attributable to the patent

Can my company claim Patent Box tax relief?

If the answer is ‘yes’ to any of the following questions, then it may be possible to take advantage of the Patent Box regime:

  • Does the company sell any products that incorporate at least one patent registered with an accredited patent office?
  • Has the company been granted any exclusive licences to exploit a product or process covered by at least one patent registered with an accredited office?
  • Does the company receive any licence fees or royalty income from the rights the company has granted out of qualifying patents it has developed?
  • Has the company received any income from the outright sale of its qualifying patents?
  • Has the company received any income from the infringement of its qualifying patents?
  • Is the company part of a group of companies with patents held by one company but developed or exploited in another group company?

Contact us

Caroline Hunt
Caroline Hunt
Director, Corporate Tax
London