Patent Box is the Government initiative that was introduced to incentivise and reward the active exploitation of patented technology in the UK by creating a competitive tax environment by offering technology based companies a reduction in their Corporation Tax rate to 10%, from the current rate of 19%, on profits attributable to innovative products and processes that are protected by a UK or European patent.
HM Revenue and Customs has just announced some further statistics on the use of the Patent Box, which shows that UK companies claimed £1,129 million in tax relief under the UK Patent Box in the accounting year 2018–19, indicating that the tax relief being paid out year on year continues its upward trend. The announcement also includes proected figures for for the accounting year 2019-2020, suggesting that the total value of claims is likely to be £1,175 million.
Much of the tax relief obtained under the Patent Box is paid to large businesses, particularly in the manufacturing sector. However, an increasing percentage of applicants claiming relief are classed as medium, small or micro businesses and we continue to encourage this class of companies to investigate the tax incentive provided by the Patent Box. Electing into the scheme to potentially qualify for a reduced corporation tax rate of 10% where a taxable profit can be attributed to the exploitation of patents can result in considerable corporation tax saving over the life of a patent.