What is Patent Box?
Patent Box is a UK Corporation Tax incentive that rewards businesses for commercialising patented innovation. If you elect into the regime, you can apply an effective 10% Corporation Tax rate to the part of your profits that comes from qualifying patents (and certain similar IP rights).
In many cases, qualifying income is broader than royalties. It can include profits from selling patented products or products that incorporate the patented invention, income from licensing, and in some situations compensation such as infringement damages.
Why is Patent Box beneficial?
For businesses building and commercialising IP, Patent Box can deliver meaningful tax savings and improve the return on your innovation spend. Here are four reasons to consider it:
Patent Box can reduce the Corporation Tax you pay on qualifying patent-related profits by applying an effective 10% rate. That means more of the profit generated by your patented products or licences stays in the business, rather than going to tax.
R&D often comes with a long payback period. Patent Box helps once your innovation moves from development into sales, improving the after-tax return on successful R&D and making it easier to justify continued investment in product improvement and next-generation development.
By reducing tax on qualifying profits, Patent Box can strengthen cash flow at the point where businesses often scale: ramping manufacturing, expanding teams, entering new markets, or building out a pipeline of new products.
Patent Box creates an extra incentive to protect inventions properly and commercialise them through the UK entity that owns or exclusively licenses the patent. With the right planning, it can also encourage better internal tracking of IP, income and costs, making future claims easier and more robust.
Who can benefit from Patent Box?
Patent Box is available to UK companies that own a qualifying patent or hold it under an exclusive licence, and earn profits from exploiting that patented innovation. It is not sector-specific.
Any business can potentially benefit if it is making money from patented products, patented processes, or patent licensing, whether you are in manufacturing, engineering, software, life sciences, clean energy, or something entirely different.
The key is not your industry. It is whether you can clearly link your patents to the income you earn, and show you meet the Patent Box conditions. This is especially relevant for businesses that have moved from R&D into commercialisation and are starting to see profits from their innovation.
Patent Box can also apply where patents are granted by the UK Intellectual Property Office (UK IPO), the European Patent Office (EPO), and certain other EEA jurisdictions, which can be helpful for businesses with international IP portfolios.
Don’t leave value on the table. We can help you understand whether Patent Box is likely to apply, what you need to evidence it, and how much benefit you could unlock. Book a free consultation to get a clear view of your options.
This includes patents granted by the UK Intellectual Property Office (UK IPO), the European Patent Office (EPO), or certain other EEA states
Your company must generate income from the exploitation of patented inventions, such as selling patented products, licensing IP rights, or receiving damages for patent infringement.
Your company must have made a significant contribution to creating or developing the patented invention, or played an active role in developing the product or process that uses it.
How we support your Patent Box claim
Patent Box can be valuable, but the rules and calculations are detailed. Our team brings together the technical, financial and tax expertise needed to build a clear, well-supported claim that is commercially realistic and compliant.
Find out if you qualify for R&D funding
Discover which UK government incentives your business could qualify for with our quick and easy self-assessment tool. In just a few minutes, you’ll receive a tailored report outlining the funding opportunities available to support your innovation and growth.
R&D tax credits, grants, Patent Box and R&D allowances are all schemes are designed to help ambitious businesses like yours thrive. Don’t leave potential funding untapped: it could be the key to fuelling your next big idea.
Patent Box – FAQs
The Patent Box is a UK government initiative designed to encourage companies to develop and exploit patented inventions by offering a reduced Corporation Tax rate of 10% on profits derived from those patents. This can significantly reduce the tax burden on innovative businesses.
Any UK-based company liable to pay Corporation Tax and holding a qualifying patent can potentially benefit from the Patent Box. This includes businesses across a wide range of industries, not just those in technology or pharmaceuticals. To qualify, your company must actively own or have an exclusive license for a qualifying patent and generate income from its exploitation.
Qualifying patents include those granted by the UK Intellectual Property Office (UK IPO), the European Patent Office (EPO), and certain other EEA countries. The Patent Box also applies to patents that meet specific development and commercialisation criteria.
The reduced 10% tax rate applies to profits generated from:
- Selling products that include a patented invention
- Licensing your patented technology to others
- Selling patented rights
- Infringement income (damages received from lawsuits)
- Income from spare parts or products made using the patented process
Absolutely. The Patent Box is not just for large corporations. Small and medium-sized enterprises (SMEs) that develop and exploit patented technology can also benefit from this tax incentive. Whether you’re a startup or a more established business, if you hold qualifying patents, you could reduce your tax bill significantly.
No, your patents do not need to be UK-specific. As long as they are granted by the UK IPO, EPO, or certain other European jurisdictions, they can qualify for the Patent Box regime. This makes the Patent Box particularly advantageous for companies with a global patent strategy.
To benefit from the Patent Box, your company must make an election in its Corporation Tax return. This must be done within two years of the end of the accounting period in which the relevant profits were earned. Once elected, you can benefit from the reduced tax rate on eligible profits moving forward.
To meet the development conditions, your company must have significantly contributed to the creation or development of the patented invention or have been involved in the ongoing development of the patented product or process. This ensures that the tax relief is targeted at companies actively involved in innovation.
The amount of tax saved will depend on the extent of your profits from qualifying patents. However, by reducing the Corporation Tax rate on these profits to just 10%, many businesses experience significant tax savings, freeing up capital for reinvestment in further innovation and growth.
Yes, the Patent Box can be used in conjunction with R&D tax credits. While R&D tax credits reduce the cost of developing innovative products, the Patent Box provides ongoing tax relief on profits generated from those products once they are commercialised. Using both incentives strategically can maximise your business’s tax efficiency.
If the patents are held by another company within your group, it’s still possible to benefit from the Patent Box, provided your company meets certain conditions, such as having an exclusive license to exploit the patents and meeting the development criteria.
We offer expert guidance and support to help you navigate the complexities of the Patent Box regime. From assessing your eligibility and calculating your qualifying profits to ensuring compliance and making the necessary elections, our team is here to maximise your tax savings and help your business thrive. Book a free consultation to chat to one of our experts.
Contact us
How do we calculate our fees?
At Kene , our fees reflect the quality of the service we provide. We always want to offer value, and our rates are an honest and competitive reflection of what we do – we apply the same diligence, rigour, and consistency to all our work. But we won’t cut corners or sacrifice client service in order to be that ‘cheap’ R&D consultancy.
As part of our commitment to outstanding service, we invest in our highly skilled and educated team of engineers, sector specialists, chartered tax advisers, and R&D specialists – our fees allow us to maintain that commitment.
Our full-service, end-to-end R&D tax claims are success-based. The fee is charged as a percentage of the claim which we agree upon before any work takes place. This fee covers the full scope of work including technical workshop(s), information gathering, report writing and full support in the event of an enquiry from HMRC. You will also be appointed a dedicated project manager who will be on hand to assist throughout the claims process.
Success-based; only pay if your claim is successful
Dedicated project manager and in-house sector experts
Full support beyond claim submission
Find out if you qualify for R&D funding
Discover which UK government incentives your business could qualify for with our quick and easy self-assessment tool. In just a few minutes, you’ll receive a tailored report outlining the funding opportunities available to support your innovation and growth.
R&D tax credits, grants, Patent Box and R&D allowances are all schemes are designed to help ambitious businesses like yours thrive. Don’t leave potential funding untapped: it could be the key to fuelling your next big idea.
Why should you consider Grant funding?
Grant funding provides a unique opportunity to accelerate your business growth by securing financial support for your innovative projects. Below are our top five reasons why you should consider R&D Grant funding.
In an initial consultation, we’ll determine if your business is eligible for R&D tax credits. We will clarify any legal provisions and seek the necessary financial information to initiate your claim.
Before we submit your claim, you’ll see a final version of your comprehensive R&D report. We will handle any HMRC inquiries and provide ongoing support, including record-keeping guidance for future claims.
Before we submit your claim, you’ll see a final version of your comprehensive R&D report. We will handle any HMRC inquiries and provide ongoing support, including record-keeping guidance for future claims.
Before we submit your claim, you’ll see a final version of your comprehensive R&D report. We will handle any HMRC inquiries and provide ongoing support, including record-keeping guidance for future claims.
Before we submit your claim, you’ll see a final version of your comprehensive R&D report. We will handle any HMRC inquiries and provide ongoing support, including record-keeping guidance for future claims.
Subscribe for R&D funding news
.svg)
