Is Your Business Eligible for Patent Box Tax Relief?
For innovative UK companies, that are focussed on developing new products, tax efficiency remains a top priority. Yet, as Corporation Tax rises and R&D Tax Relief undergoes continuous reform, one somewhat underused relief, Patent Box, stands out, explains Cathy Kennedy, Associate Director at Sumer Northern Ireland.
Introduced in 2013, this scheme offers a reduced 10% Corporation Tax rate on profits earned from patented products and technologies. It’s designed to reward commercial success from innovation, making it a beneficial tool for businesses that are looking to enhance returns from their intellectual property (IP).
READ MORE: Catalyst Opens Applications for Invent 2025 with £55K Prize Fund for Entrepreneurs
Why Is Patent Box Underutilised?
Despite its benefits, Patent Box is still largely ignored, especially by SMEs. In 2021/22, 94% of claims came from large companies, with just 6% from SMEs. In Northern Ireland, only 2% of UK claims were made, spread across 65 companies, even though over 9,000 local firms report turnovers above £1m.
So, why the low uptake?
· Lack of Awareness – Many companies simply don’t know the scheme exists.
· Patent Requirement – Unlike R&D Relief, Patent Box requires a granted UK or EU patent.
· Confidentiality Concerns – Some businesses prefer trade secrets over formal patenting.
· Cost – Patent application fees and legal advice can deter smaller firms.
Why It’s More Valuable Than Ever
With the Corporation Tax rate now at 25%, the 10% Patent Box rate is even more attractive. For example, a company with £1m in qualifying patent income could now save £150,000, up from £90,000 under the previous rate.
Qualifying income includes:
· Sales from patented products
· Licensing and royalty income
· Damages from patent infringement
Proper structuring and profit-streaming methods are needed, and only UK/EU patents qualify.
READ MORE: Sara Davies MBE to headline All-Island Female Entrepreneurs Conference
Understanding The Patent Box Opportunity
Patent Box isn't just for high-tech or pharmaceutical companies. Any business that creates something new in engineering, software, agri-tech, or manufacturing, could benefit.
To ensure your claim is successful, companies should align their R&D and IP strategies. By thinking about patents earlier in the innovation cycle, firms can benefit from both R&D Tax Relief (for development) and Patent Box (for commercial profits).
Leading local accountancy firm, Sumer Northern Ireland is hosting a free event ‘Innovation Pays: Understanding the Patent Box Opportunity’ Breakfast Briefing to help companies explore this opportunity. Taking place on Tuesday 27th May, 8am at The Merchant Hotel, Belfast, attendees will
hear from expert speakers including Cathy Kennedy and Dr Phil Chambers, Sumer NI, David Stewart OBE, HMRC NI and Ian Wilkinson, Invest NI who will discuss:
· Eligibility and claim process
· IP strategy and tax implications
· Common pitfalls and how to avoid them Spaces are limited. To Register your interest contact: emma.mcallister@sumerni.co.uk
Read the latest edition, Spring 2025, of Sync NI here completely free of charge.
Subscribe to the Sync NI newsletter for all the latest technology news, jobs and upcoming events in Northern Ireland.
Visit Sync NI online for the latest technology news in Northern Ireland.
