Retain more profit with Patent Box

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Innovations, inventions, and intellectual property. They're all incredibly valuable in the world of business, and the savvy often safeguard them with the use of a patent.

But safeguarding your ideas and protecting your competitive advantage is just the start. Patent Box can turn your innovation and out-of-the-box thinking into a potential tax saving, helping you retain more profit. Despite being introduced nearly a decade ago, Patent Box is still one of the most underutilised reliefs in the UK tax system.

The application process can be complicated with intricate accounting analysis, profit attribution, patent mapping, and wider tax issues to consider. It's complex, but that’s where we can help.

Why now?

If your business generates more than £250,000 in profit, you are about to experience a significant corporate tax rate jump from 19% to 25% of 1 April 2023.

Claiming Patent Box could offset the upcoming changes with an effective tax rate of 10% applied to eligible profits – more than half of the standard UK corporation tax rate.

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What if you don't hold a patent?

Whilst you don’t need to 'reinvent the wheel' to be eligible for a patent, there are two key requirements. It needs to be new with no knowledge of it already publicly available, and it needs to be inventive - so it can’t just be a simple change to something that already exists.

It’s a common misconception that patents can set you back a six-figure sum. A provisional application can cost as little as £310. Whilst it is context-dependent, a UK-only patent costs an average of £6,000 with the support of a patent attorney.

Patent Box will then allow you to maximise the financial rewards of this initial investment, even if your application process isn’t finalised yet.

Need support in scoping out patent opportunities? Contact us.

How our client received a £2.7 million cashflow boost with Patent Box

Having already worked with this manufacturing client on their Research and Development (R&D) claims, we identified that they held a patent for a significant component of their work. Our team carried out further investigation and found that they would be eligible for Patent Box...

The challenge

Identifying qualifying IP

Identifying qualifying IP was a key challenge. The client was uncertain as to whether they could claim for the patented component or the larger product which incorporated the patented component. The latter was significantly more lucrative, but this required unravelling complex legislation and carrying out calculations to attribute profits...

The solution

Developing a tailored methodology to qualify income

Working closely with the client's technical team and assessing the product in question, we found that the IP incorporated into the final product and the overall project which included the patent. Therefore it could be treated as qualifying IP income.

We developed a bespoke methodology to qualify income and expenses relating to the qualifying IP within each project. The relevant results and information were then documented in a report and then successfully submitted to HMRC.

The results

A cashflow boost to enable further innovation

Since engaging with this client on Patent Box, we have successfully submitted five claims for them. With our support, the company has saved over £2.7 million in tax solely from the Patent Box regime. This has allowed them to bolster their investments in further innovation and product development.

The future

Scoping further patent opportunities

We've since set up a process to track and maximise further patent opportunities. The client now holds quarterly meetings with technical members of the team in which they look to scope out and apply for further patents across the business. Overall, a much more effective way to unlock the commercial value of patents across the business.

Find out if Patent Box could boost your cashflow

Find out more about
claiming Patent Box tax relief

We have saved businesses tens of millions of pounds in tax incentives and reliefs over the years. Our team of tax experts understand the legislation inside and out and can support you through the entire claim process.