The Patent Box is a UK tax incentive that lets you apply a reduced 10% rate of corporation tax to profits earned from your patented inventions. Patent Box tax relief helps your business keep more of the value created through innovation, while encouraging the commercialisation of intellectual property (IP) in the UK.
Who is eligible for Patent Box tax relief?
Your company may be eligible if:
- You pay UK corporation tax.
- You own or exclusively license one or more qualifying patents. These must be granted by the UK Intellectual Property Office, the European Patent Office, or select EEA national offices. Rights similar to patents such as plant variety rights and marketing authorisation rights can also qualify.
- You have carried out qualifying development on the patented invention, or on a product or process that incorporates it.
- You earn income linked to the patented invention, such as sales of patented products, licence fees, or damages from patent infringement.
Patent Box can benefit companies across many sectors, including manufacturing, life sciences, engineering, technology and more.
It can also be used alongside R&D tax relief to support the full innovation cycle.
How Ayming can help
We help businesses like yours optimise the value of the Patent Box and R&D tax relief schemes. Our experts analyse your patented income and R&D expenditure, using a customised approach to help you achieve the best possible tax outcome.
We understand the complexities of the Patent Box regime and offer tailored support to ensure your company benefits fully from the available tax relief.
Contact us today to find out more about our Patent Box service!
FAQs
Does the relief apply to all profits?
Patent Box tax relief only applies to profits that are directly linked to your patented inventions or products and processes that incorporate them. It requires a detailed patent box calculation to identify these profits and apply the reduced tax rate.
Can I claim Patent Box and R&D tax relief together?
Yes – many businesses use both tax incentives in combination. R&D tax relief reduces the cost of R&D activities, while Patent Box relief rewards the successful commercialisation of innovation. It’s a powerful way to support both innovation and long-term profitability.
How do I elect into the Patent Box regime?
You must elect into the Patent Box by making an election in your company’s tax return. This needs to be done within two years of the end of the relevant accounting period. We can help make sure your election is made correctly and on time as part of claiming Patent Box.
Is the calculation of Patent Box relief complicated?
It can be. The Patent Box calculation involves identifying income linked to qualifying IP, excluding certain routine and marketing profits, and applying an R&D expenditure fraction. This ensures the reduced tax rate applies only to profits from innovation you’ve actively developed. Our experts can manage this process for you.
What if my patent is pending?
You can only claim Patent Box once your patent applications are granted. However, you can elect into the regime earlier. So when your patent is granted, you can claim for the relevant profits earned while the application was pending (subject to certain conditions).
Is Patent Box only for large companies?
The Patent Box regime is open to any company paying UK corporation tax that holds qualifying IP and meets the eligibility criteria. Many SMEs across sectors benefit from the scheme. It encourages companies of all sizes to develop and retain intellectual property in the UK.
Does Patent Box apply to international patents?
Patent Box tax relief applies to patents granted by the UK Intellectual Property Office, the European Patent Office, and certain other EEA national offices. Other international patents do not qualify under the UK box regime. In addition, rights similar to patents such as Plant Variety rights and Marketing Authorisations can also qualify.
Explore other frequently asked questions about the UK Patent Box regime in our related article The UK Patent Box Regime: Your Questions Answered.
