What is Patent Box?
Patent Box enables UK companies to apply a reduced 10% Corporation Tax rate on profits derived from qualifying intellectual property (IP).
To qualify, a UK-registered company paying Corporation Tax must own qualifying IP rights or hold an exclusive licence and must meet both the development and active ownership conditions.
Why was it Introduced?
HMRC’s Patent Box aims to encourage innovative companies to develop, retain and commercialise their intellectual property within the UK, thereby making the economy more internationally competitive and supporting the growth of high-value jobs and high-tech companies.
Qualifying Patent Box IP Rights
Patents
Patents granted by the UKIPO, European Patent Office or certain EEA countries (Austria, Bulgaria, Czechia, Denmark, Estonia, Finland, Germany, Hungary, Poland, Portugal, Romania, Slovakia, Sweden).
Pending Patents
Pending patents, if elected within 2 years of year-end and tied to qualifying R&D.
Supplementary Protection Certificates
Supplementary Protection Certificates (SPCs) for medicinal or plant protection products.
Medicinal and Veterinary Products
Medicinal and veterinary products with marketing authorisations or data protection.
Plant Breeders’ Rights
Plant breeders’ rights, plant variety rights and plant protection products with data protection benefit.
Patent Box Statistics
1,650
Companies Elected
£1.98bn
Total Relief Value
61%
Manufacturing Companies
95%
Of Relief Went to Large Companies
Who can Benefit from Patent Box?
To elect into Patent Box, a company must:
- Be a UK trading company liable to Corporation Tax.
- Own or have exclusively licensed-in qualifying IP rights.
- Have undertaken qualifying development on those rights, by making a significant contribution to the creation or development of the patented invention or a product that incorporates it.
Development & Active Ownership
Development condition
The company has created, significantly contributed to or carried out significant activity in developing the invention or something that incorporates it.
Active ownership condition
The company has developed the IP itself or is actively managing it, for example through maintenance, licensing, further development or defending it.