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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.

What are patent box tax incentives?

The Patent Box is a 10% rate of corporation tax that can be claimed by companies that have patented products, or processes, developed by the company. It is applicable to patent related profits and applies for the life of the patent, lasting up to 20 years.

Typical businesses claiming patent box reliefPatent box

According to the latest HMRC statistics (issued October 2019) only 1,170 claims were made in 2016-17 (the most recent accounting period on which full statistics are available).

The uptake of the Patent Box is disappointing, particularly as the tax savings from paying tax at 10%, compared to the normal 19% rate, over the whole life of the patent can be great.

Of the companies that claimed, over half were in manufacturing, including the pharmaceuticals.

Is my company able to claim Patent Box tax

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Has the company developed, or substantially contributed to the development of, a product (or process) that it has patented? 
 AND  
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Has a patent been granted, or in the process of being granted (patent pending), in any of the following accredited patent offices: UK Intellectual Property office; European patent office; Austria; Bulgaria; The Czech Republic; Denmark; Estonia; Finland; Germany; Hungary; Poland; Portugal; Romania; Slovakia and Sweden

If the answer is YES to both of the above two questions,
then the company may have a qualifying patent and be able to claim patent box benefits
if any of the following circumstances apply.

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Does the company sell any products that incorporate at least one patent registered with an accredited patent office?

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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?

 check-circle-2 Does the company receive any licence fees or royalty income from the rights the company has granted out of qualifying patents it has developed?
 check-circle-2 Has the company received any income from the outright sale of its qualifying patents? 
 check-circle-2 Has the company received any income from the infringement of its qualifying patents? 
 check-circle-2 Is the company part of a group of companies with patents held by one company but developed or exploited in another group company? 

 Can my company benefit from the Patent Box?

patent box flowchart 

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Why choose Crowe

Our specialist team can advise on all aspects of this generous relief. Our advice is tailored, pragmatic and focused to your needs.

How we help our clients

We can help you to maximise the available benefits by:

  • advising on potential opportunities under the Patent Box regime
  • helping carry out an initial high level assessment of the potential benefits
  • helping review income streams to identify qualifying Patent Box income and profits
  • assisting in setting up processes that can facilitate the efficient capture of Patent Box data from the accounting records.

Contact us

Stuart Weekes
Stuart Weekes
Partner, Corporate Tax
Thames Valley