Patent Box Tax Relief

What is Patent Box Tax Relief?

In 2009, in an effort to further reward innovative companies, the UK Government announced an initiative called “the Patent Box”. This legislation gives a reduced effective rate of corporation tax to 10% for any companies making an income from patents.

The relief has been phased in from 1 April 2013 and the full benefit of the Patent Box has been available from 1 April 2017.

In 2015/16, a total of 1,160 companies claimed relief under the Patent Box with a total value of £754.3 million. The number of claims for 2016/17 so far is 1,025 with a value of £942.5 million, however there are still hundreds of eligible companies who have not claimed!

What is Patent Box Tax Relief?

Your company will qualify for relief if:

  • You own patents, or
  • You own an exclusive licence to exploit a patent
  • It’s a IK, specific EEA country or EU patent
  • There are no other IP – not trademarks, designs, copyrights etc.

Qualifying income includes:

  • Sale of patented items or those that incorporate a patent
  • Licence fees
  • Proceeds from sale of patents
  • Compensation income of infringement of owned rights

What isn't included:

Income from regular activities (that is income earned regardless of patent rights).

Income from marketing asset return (that is income earned from branding rather than technological innovation).