Patent Box Tax Relief

Patent Box Explained

What is the patent box scheme?

The patent box scheme is a government IP incentive initially introduced in 2013. It currently allows you to qualify for a reduced rate of corporation tax down to as little as 10%. This could be 9% from the normal 19%. This scheme has been put in place to promote innovation and reward companies that develop and utilise IP.
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It applies to those who own or licence a patent from the allowable patent offices, the UK Intellectual Property Office, the European Patent Office or certain countries within the European Economic Area. As well as similar from of IP like certain other medicinal or botanic innovation right.
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Over £4.9 billion has been claimed since the inception of the scheme, however only a small amount of companies are claiming this form of tax relief, as little as 920 SME’s claimed in 2017-2018.

Who qualifies for the Patent Box Scheme?

To qualify for the patent box there is a list of requirements:

• Be a UK limited company
• Be subject to corporation tax
• Own or licence a patent or Similar IP – You must own or licence a patent that is registered in UK Intellectual Property Office, the European Patent Office or certain countries within the European Economic Area
• To have performed development on this IP (R&D) – If you created and own the patent then this is the IP development you undertook to have the patent, if you are licensing a patent you have to have the rights to develop upon the initial IP
• To be generating profit from this IP – You only get the corporation tax reduction on the profits related to the IP so to benefit you must be making profit from this IP

Please see our dedicated Patent Box pages here for further information.