Patent Box

Rewards for innovation

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What is Patent Box

If your business is investing in developing intellectual property then you should be rewarded for that effort. 

Patent Box is a scheme which is administered by HMRC that seeks to reward innovative companies. It encourages companies to keep their IP (intellectual property)  within the UK and rewards them by reducing their corporation tax on profits resulting from qualifying IP income to 10%.

100% of a company’s worldwide profits arising from qualifying IP income should qualify for the 10% of the Patent Box corporation tax relief, irrespective of whether the patented element of the product or process is large or small.

From 1st April 2023, Corporation Tax is due to increase from 19% to 25% for companies with profits over £250,000. This means that those who are taking advantage of Patent Box, will receive an even greater benefit from the scheme, as they will be saving 15% tax on their qualifying IP profits. 

Though the statistics for the 2018-2019 Patent Box data is yet to be fully accounted for, it is still overwhelmingly positive. HMRC have reported 1,230 claims for this scheme and the average claim for that year is £806k.

(View full report here)


How We Work

Patent Box is by its nature a complicated tax area. So HMRC require a quite specific methodology in order to evaluate a claim. Our process enables us to maximise your claim value by putting in place the bookkeeping practices and transparent formulas keep your workload light and your stress minimal, while capturing the key technical information. We take the pain and the strain, out of the claim.

Our 4 Step Process


Qualify

It’s possible to qualify for Patent Box with a UK, European and some international patents – or with an exclusive UK licence from somebody else’s patent.

Calculate

Worldwide sales and patent licence revenue can be included within the scope, but there are some complex formulas that have to be applied at this stage.

These calculations should also be started before a patent has been granted, as they can be used later!

Narrate

Once the patented profits have been established, we will provide a transparent report detailing our calculations, assumptions and how we arrived at that figure.

Get Paid

Once you are happy with all of the information we submit your claim for you and HMRC will process the documents and either pay your rebate into your account or lower your corporation tax bill.


Do I Qualify?

Here are the 4 criteria:

  • You need to be a UK limited company, which pays UK corporation tax
  • You need to have developed an innovative product or process
  • You need to have filed a patent application
  • You need to have generated profits relating to the patented invention

Book a meeting

We often get a bit hung up over whether something is worthy of a patent. It’s worth remembering that most patents are about small technical improvements on existing products or processes. 

 

Another common misconception is that companies believe their IP isn’t patentable or that the process is long-winded and expensive, thus making it not worthwhile. Patent Box was designed to help with this. The product or process that is patented may be minor, but 100% of the company’s profits arising from the product should qualify for 10% corporation tax.