Many businesses are still missing out on Patent Box tax relief, even though it can reduce the corporation tax rate on profits from patented products to just 10%. If your business has created something new and protected part of it with a patent, you could be paying much less tax than you are now.
The idea behind the Patent Box is simple. If your company owns a qualifying patent (or has an exclusive licence to use one) and you were genuinely involved in developing it, then some of the profits linked to that invention may qualify for the lower 10% tax rate. This applies whether you earn money from selling a product that includes patented technology, or from royalties and licence fees.
For many small and medium‑sized businesses, even one patent linked to a successful product or process can make a Patent Box claim worthwhile.
The rules were updated a few years ago so that the tax benefit is more closely tied to where the development work took place. Businesses that carry out most of the innovation themselves normally get the biggest advantage.
HMRC now expects clearer and more detailed information when businesses make a Patent Box claim. Since late 2024, companies have been asked to show more evidence about why they qualify, how the qualifying income was worked out, and how the final figures were calculated. While this isn’t a strict legal requirement, giving too little detail can lead to HMRC asking further questions, so preparing good supporting paperwork is important.
Even with these changes, the Patent Box remains very attractive. The number of companies using it has stayed steady, and the total amount of tax saved each year continues to rise. With corporation tax now at 25%, the opportunity to pay just 10% on qualifying profits is more valuable than ever.
Sean Farnell, Partner at Burgis & Bullock, says: “Many businesses underestimate just how accessible Patent Box can be. You don’t need a laboratory full of scientists – you just need to be developing something new, protecting it properly and commercialising it. With corporation tax higher than before and HMRC expecting stronger evidence, now is the moment to take the regime seriously. A well‑prepared claim can deliver genuine tax savings, but only if you act before the opportunity passes.”
Some smaller businesses assume the Patent Box is too complicated or only relevant to big companies. A simple review can help identify whether your products, patents or revenue streams qualify. Timing is important, because you have only two years from the end of the accounting period to make an election. If you miss the deadline, you cannot go back and claim for that period.
Don’t miss out on tax savings. If you’d like to find out whether the Patent Box could benefit your business, Burgis & Bullock can help you review your position and, where appropriate, introduce you to Patent Specialists – including Patent Attorneys – for a free initial evaluation.
Contact your local B&B office for more details: https://www.burgisbullock.com/contact-us/
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