Perceived complexities continue to limit Patent Box take up, but claims are still worthwhile

Statistics released by HMRC today show only modest growth in the number of companies benefiting from HMRC’s Patent Box tax regime in recent years. While the level of government support provided to companies through the Patent Box regime remains over £1bn per year, this figure has only seen marginal growth since 2016, and the number of companies using the regime has remained static during this period. The data shows a relatively small number of large organisations are benefitting from the relief, while smaller businesses appear not to be claiming. RSM attributes this trend to the perceived complexity of the Patent Box legislation. 

HMRC projects a fall in the number of claimants for 2020 as the impact of the pandemic on company profitability will likely mean this profit-based tax relief will cease to be applicable for many companies. RSM recommends businesses should seek advice from their tax advisor to find out whether the Patent Box regime could support them. 

Graham Steele, Partner, Innovation Reliefs says: “Taking a fresh look at Patent Box is worthwhile, as claims are often simpler than expected and the tax savings can be significant. Patent Box applies a reduced 10% rate of Corporation Tax on profits made using patented technology. Factors such as the planned increase in corporation tax rates and a return to company profitability as we exit the pandemic means many of our clients are seeking advice now to ensure they are well prepared to take advantage of this relief over the next few years. We anticipate Patent Box continuing to become more attractive as we move into 2022.”