Patent Box Tax Relief

Patent Box Tax Relief Explained

What is the patent box scheme?

The Patent Box tax relief is a UK government incentive, introduced in 2013, that encourages companies to retain and commercialise intellectual property in the UK. It reduces qualifying corporation tax on relevant profits to 10%, compared to the standard 25% rate.
​
It applies to companies that:

• Own or licence patents from the UK Intellectual Property Office, European Patent Office, or certain EEA countries
• Hold similar IP rights, such as for medicinal or botanical innovations

​In 2022/23, £1.46 billion was claimed, yet fewer than 10% of claims were made by SMEs—suggesting many are missing out.

Who qualifies for the Patent Box Scheme?

To qualify for the patent box there is a list of requirements:

• Be a UK limited company
• Be subject to corporation tax
• Own or licence a patent or Similar IP – You must own or licence a patent that is registered in UK Intellectual Property Office, the European Patent Office or certain countries within the European Economic Area
• To have performed development on this IP (R&D) – If you created and own the patent then this is the IP development you undertook to have the patent, if you are licensing a patent you have to have the rights to develop upon the initial IP
• To be generating profit from this IP – You only get the corporation tax reduction on the profits related to the IP so to benefit you must be making profit from this IP