Patent Box FAQs

We’re here to help you navigate the Patent Box

Here are some of our most frequently asked questions, however, if you can think of anything not listed, let us know as we would be happy to answer anything that you can think of.

Patent Box FAQs

Can I make a Patent Box claim as well as an R&D claim?

Yes, you can! The R&D and Patent Box schemes are designed to work in conjunction, so you may be able to claim R&D relief based on expenditure incurred and Patent Box relief based on income derived from IP.

We share the IP with another company, will it still be possible to claim?

This is a more complex area and will differ based on the facts of each scenario. Fundamentally a Patent Box claim must be made on IP held by the company making the claim. However, where IP is shared, calculations must be made which remove the percentage of profits owned by the other company.

Can we still claim even if we don’t make our own products?

Yes! As long as you have contributed to the development of the product and receive a licencing income or royalties from your IP rights, you can make a claim for Patent Box relief.

I own several patents, what can I actually claim for?

If your company makes one product, then you only need to have one component of that product with an IP right in order to make a claim. Having additional IP rights will not impact the level of relief.
If your company has income relating to more than one product, then as long as there is a qualifying IP right, as described above, then the income relating to each relevant product can be included in the claim.

What income qualifies for the relief?

There are five types of income which can qualify for relief.

  • Sales of items which are either patented or incorporate components with IP rights
  • Licence and royalty income
  • Sales of IP rights
  • Damages received by the company in respect of an infringement, or alleged infringement of IP rights
  • Damages, insurance or compensation received by the company in respect of a loss of relevant income

How do I know if I qualify for the Patent Box tax relief?

Luckily the Patent Box regime applies to UK companies (not sole traders etc.) which meet the following criteria:

  • The company holds a qualifying IP right or an exclusive licence for a qualifying IP right
  • The company has significantly contributed towards the development of the invention either during or post creation
  • The company has performed a significant amount of the active management of the IP rights held (i.e. the IP isn’t held in a passive holding company)

Is Patent Box just for UK patents?

Fortunately, the Patent Box scheme covers more than just patents registered in the UK. It is intended to cover the following IP categories:

  • A patent granted by the UK Intellectual Property Office
  • A patent granted by the European Patent Office
  • A patent granted under the law of a specified European Economic Area State
  • A patent application that would have complied with the requirements of the Patent Act 1977 but was not granted due to reasons of national security

Rights similar to patents are also covered by the scheme:

  • Plant variety rights
  • Marketing or data protection rights for human or veterinary medicines, plant breeding or plant varieties

What is the Patent Box?

The Patent Box is an HMRC approved tax relief scheme which was introduced in 2013 to encourage innovation in the UK. The scheme taxes profits attributed to qualifying intellectual property (IP) at a lower corporation tax rate of only 10%, as opposed to the current rate of 19%, giving qualifying companies a considerable boost to their finances.

Could You Be Eligible?

If you would like to discover whether your business may qualify for R&D tax relief