Patent Box Tax Relief

Businesses involved in IP development can unlock their tax savings entitlement with our patent box service.

The Patent Box scheme offers a significant tax incentive for businesses that develop and commercialise patented inventions. At Wilby Jones, our team of tax specialists possesses extensive knowledge of the Patent Box program and its intricacies. We guide you through the entire process, maximising your potential for tax savings and propelling your innovative ideas towards greater profitability.

What is Patent Box?

The Patent Box scheme is a UK tax incentive for businesses that invest in innovation. It allows businesses to reduce their corporation tax rate on qualifying intellectual property (IP) income to 10%. It’s a particularly appealing scheme, considering that corporation tax increased from 19% to 25% in April 2023. Despite existing for over a decade, Patent Box relief remains an underutilised innovation incentive within the UK tax system with just 1,510 companies claiming in 2022.

Regardless of the size or type of your business, you don’t have to submit a fully patented product or process. Instead, you can patent a specific component of your product or part of your process, and the profits from this can qualify for the scheme’s benefits.

Am I Eligible to Claim Patent Box Relief?

Patented Inventions: Your business must hold a valid patent granted by the UK Intellectual Property Office (IPO) or the European Patent Office (EPO) for a qualifying invention.
Profit Source: The profits you claim relief for must be directly linked to the patented invention. This includes income generated from selling patented products, licensing the patent to others, or using the patented process to manufacture goods or services.
Company Location: Your business must be a UK resident company for tax purposes.

Our Patent Box Process

Eligibility Assessment

Through an initial consultation, we’ll assess your potential for claiming Patent Box relief. Our team will verify your business activities and intellectual property portfolio. We'll assess your patents, identify qualifying income streams, and conduct a preliminary analysis of your eligibility for the scheme. By the end of this step, you'll have a clear understanding of your potential tax savings and the viability of pursuing a Patent Box claim.

Claim Preparation

We’ll then handle the preparation of your Patent Box claim compiling all necessary documentation to ensure your claim adheres to HMRC's requirements. This includes a compelling narrative that clearly demonstrates your eligibility for relief along with supporting documents, we’ll submit this to HMRC on your behalf. Next, we stream the business’s income and expenditure to determine how its profits map to its relevant product sales, royalties and license fees, patent sales, infringement income and notional royalties on processes or services.

Ongoing Support

Our commitment to your success extends beyond the initial claim submission. We remain available to answer any questions you may have throughout the process and provide ongoing support as needed. Our team will closely monitor any communication from HMRC and provide expert guidance if any clarifications or adjustments are required. We're here to ensure a seamless experience and maximise your long-term benefit from the Patent Box scheme.

Patent Box FAQs

How do I elect into the Patent Box scheme?

Your company must elect into the scheme during your corporation tax return. This must be done within two years of the end of the accounting period in which the relevant profits were earned.

Who qualifies for Patent Box?

UK based companies who pay corporation tax and hold a patent can potentially benefit from the scheme. Patent Box isn’t just limited to science and technology companies, all industries can be eligible.

How much tax can I save with Patent Box?

The amount of tax you can save depends on the profits from your qualifying patents. By reducing the corporation tax rate on your profits to just 10%, your business can save, freeing up capital for reinvestment in further innovation and growth.

What types of patents qualify for Patent Box?

Any business who’s had a patent granted by the UK Intellectual Property Office (UK IPO), the European Patent Office (EPO), and certain other EEA countries.

What income is eligible for the reduced tax rate under Patent Box?

The reduced 10% tax rate applies to profits generated from:

Selling products that include a patented invention

Licensing your patented technology to other

Selling your patented rights

Income from spare parts or products made using the patented process

Infringement income such as damages received from lawsuits

Can smaller businesses benefit from the Patent Box scheme?

Of course! Small and Medium sized enterprises SME’s that hold a patent can also benefit from this tax incentive. The scheme is not just limited to larger corporations.

Do I need to have all my patents in the UK to claim Patent Box?

No, your patent doesn’t need to be UK specific. If they’re granted by the UK Intellectual Property Office (UK IPO), the European Patent Office (EPO), and certain other EEA countries they can qualify. This makes it a beneficial scheme for those with plans to expand globally.

What if my patents are held by another company in my group?

As long as you meet certain conditions, you can still benefit from the Patent Box scheme even if the patent is held by another company in your group. You may need exclusive license to exploit the patent to do this.

Can I claim both R&D tax credits and Patent Box?

Since Patent Box is not considered state aid, R&D Tax Credits can also be claimed so the schemes can be used side by side. In fact, companies that have invested time and resources into qualifying R&D and hold eligible IP can benefit significantly from using both tax relief schemes together. 

I’ve heard of Nexus, how does this relate to Patent Box?

To qualify for tax relief, companies must now show a direct connection between the research and development (R&D) activities that led to their patents and the profits those patents generate. This link is known as the ‘Nexus’.

How can Wilby Jones help with my Patent Box claim?

Proper planning and detailed knowledge of the Patent Box will allow your business to benefit from the scheme while navigating HMRC’s requirements with confidence. Choose a partner you can trust and speak to our team today.