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COVID-19: A surge of innovation and Patent Box

Emma Clewes, Director, Corporate Tax
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As we adjust to the ‘new normal’ created by COVID-19, we are witnessing an emergence of ingenuity, stimulated by new challenges, threats and working habits.

The UK has seen a surge in innovation, with April being reported as 'one of the busiest months' for patent enquiries in recent years. The technology and scientific sectors are predicted to show an increase in innovation, spurred on by the need to adapt to a new normal.

There has already been a wave of innovative solutions to problems that had not arisen before COVID-19. Take the ear guard as an example, developed to ease the pressure of wearing face masks for extended periods of time, a problem that was not prevalent before COVID-19.

In the months ahead, as the world adjusts, UK companies developing innovative solutions may want to protect these ideas to lock in future revenue streams. Where these new ideas can be patented, the UK Patent Box can provide valuable tax relief.

The UK Patent Box enables companies to apply a lower rate of Corporation Tax to profits earned after 1 April 2013 from qualifying patented inventions and equivalent forms of intellectual property. The lower rate of Corporation Tax under the Patent Box is 10% compared with the main rate of Corporation Tax, which is currently 19%.

Latest statistics, indicate that over 1,000 UK companies claimed Patent Box relief in 2016/2017 and 2017/2018 (forecast) achieving tax relief of over £1,000 million. Over half (55%) of the companies that claimed in 2016-17 were in the Manufacturing sector (including pharmaceuticals).

The aim of the UK Patent Box is

  • to increase the level of patented IP in the UK and ensure that existing patents  are further developed and commercialised in the UK
  • manufacture and sell those innovative products and services from the UK
  • locate and secure the jobs associated with the development and exploitation of the patents in the UK.

As we ease into the new normal, developing IP and securing future income streams and employment will be an important part of the recovery phase. Alongside, the R&D Tax reliefs available to UK companies, Patent Box is a valuable relief. Both support innovation by reducing a company’s tax burden and freeing 

If you are developing new ideas and products and want to explore whether you can make a claim for Patent Box or R&D tax reliefs please contact our team or your usual Crowe contact. You can also visit our dedicated Patent Box pages for more information.

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Stuart Weekes
Stuart Weekes
Partner, Corporate Tax
Thames Valley