Tax Relief via Patents - Are You Missing Out?

December 06, 2019

The Patent Box scheme is a way of utilising patents to generate savings on corporation tax. With over half of the companies claiming part of the manufacturing sector, could this be an opportunity for you?

HMRC has recently published some statistics on the Patent Box, which show that some companies continue to use it to claim a significant discount on corporation tax.

Are you missing out?

In 2016-17, 1,170 companies claimed relief under the Patent Box, and the total value of relief claimed was £1,035million.

Over half (55%) of the companies that claimed in 2016-17 were in the manufacturing sector. The next highest sector is ‘wholesale and retail trade’.

The UK Patent Box allows a company to use a lower rate of corporation tax for profits earned after 1 April 2013 from qualifying patented inventions. The lower rate of corporation tax under the Patent Box is 10% compared with the main rate of corporation tax, which is currently 19% .

A company must notify HMRC if they wish to claim relief under the Patent Box. The claim is made after the relevant patent has granted and within two years after the end of the accounting period in which the relevant profits and income arise.

You may be able to get patents for development of your manufacturing processes or products. The key requirements for patentability are that the development is new and not obvious. The ‘inventive step’ required to be not obvious may be lower than you think. Patentable developments occur routinely in many companies, even if they are not routinely patented. Now there is a real incentive to identify and patent these developments.

How we can help

We have been advising our clients about Patent Box since it came into effect in 2013 and have saved many of them considerable amounts in corporation tax.

If you would like to know more about how this might assist your business, please don’t hesitate to reach out to one of our experts.