Innovate, protect and flourish: How can Patent Box support businesses through challenging times?

26 May 2023

Innovate, protect and flourish: How can Patent Box support businesses through challenging times?


Tax Reliefs including R&D

With almost 1,600 Northern and Scottish businesses potentially missing out on invaluable tax relief, here is everything you need to know about holding a patent and the Patent Box regime.

It’s no secret that the North of England and Scotland is a melting pot for innovation driven by laser-focused owners who possess both vision and technical expertise. And with pressure coming in from all angles, it’s more important than ever to ensure that your ideas and innovations are protected.


Patenting your inventions could be the solution your business is looking for. But with a common misconception about the cost of investing, coupled with a lack of awareness – many are still missing out on patents and the tax relief that comes with it.

In the North of England and Scotland more than 1,600 businesses who have, or are in the process of applying for a patent could be missing out on Patent Box tax relief. And this number doesn’t account for those businesses who could be eligible to apply for a patent.

With this in mind, we’ve outlined everything owner managers need to know about Patent Box, in order to accelerate growth during these economically challenging times.


What is a patent?

In essence, a patent protects your intellectual property. A patent lasts five years, after which the patent can then be renewed every year for up to twenty years. This allows you to protect the intellectual property that you’ve worked hard on, with the right to take legal action against any infringements.

Although protection of your intellectual property (IP) can be the main purpose of a patent, it’s not the only benefit.


The benefits of holding a patent for innovative businesses

Tax relief

Businesses who hold a patent could be eligible to receive invaluable tax relief through the Patent Box regime.
If you generate profit from your IP and are eligible for patent box relief, you will pay only 10% corporation tax. This is a significant cut from the current rate of corporation tax which stands at 25%.

Patent licensing agreement

A patent licensing agreement gives the licensee rights regarding the use or sale of your patented product or process.

By licensing out your IP, you won’t need to find funds to commercialise your products or ideas, as the cost of manufacturing, packaging and marketing will be covered.

Industry reputation

Holding a patent or exclusive license often shows that you are a bona fide expert in your field, with the capability to push boundaries within your industry.

With this in mind, it’s not surprising that businesses who hold a patent are able to command more trust and respect in their respective sectors. When it comes to reputation, this helps businesses to establish themselves as trailblazers of their industry and marketplace.


What is the Patent Box regime?

The Patent Box regime was introduced in April 2013, and has since remained a pillar in the UK tax relief offering.

Under the Patent Box regime, businesses who commercialise their inventions are eligible to pay just 10% corporation tax on the profits they make directly relating to the patented product or process. This offers an invaluable cashflow injection, enabling businesses to expand and continue their innovative work.


Patent Box is a missed opportunity for many

Whilst the price of a patent varies from business to business, the average patent can cost only a small fraction of the relief on offer. For many businesses this is a small price to pay for the ongoing financial and commercial benefits holding a patent brings, especially when it comes to the relief .

With this in mind, it’s disappointing to see that recent statistics show that out of 20,000 businesses across the North of England and Scotland who hold or are within the process of applying for a patent, only 410 businesses have utilised Patent box relief.


Innovate, protect and flourish with Patent Box tax relief

As businesses continue to navigate through these economically challenging times, innovation will be key for business owners when it comes to being able to adapt, pivot and thrive.

Businesses who are consistently coming up with new ideas, products or services should consider protecting their intellectual property so they can retain and grow market share.

There’s no doubt that patents and trademarks can offer this protection, and the long run, the rewards of the investment can be huge, especially when taking a hybrid approach towards Patent Box and R&D tax relief.



Supporting you with Patent Box

If you are an innovative business who could benefit from Patent Box, or would like to assess your business’ potential savings through the tax relief, our dedicated team of tax advisors  are here to guide you. With a combined industry experience of over 25 years can advise you on your next steps.