Fewer companies claiming patent box tax relief according to recent HMRC data – Are you?

At the end of September 2024, the UK’s HMRC released the latest Patent Box Statistics for the financial year 2022-2023. These shows a small increase in the corporation tax relief to £1.469bn, although fewer companies were actually claiming the relief.

Background

In 2012, the UK government started a corporation tax relief scheme to specifically benefit ‘UK PLC’ making and selling new and innovative products and services protected by a UK patent. This aims to commercialise patent protected innovation. A ‘relief’ is available that reduces corporation tax down to 10%.

Latest HMRC statistics

Part of why there has been a reduction in claimants could be a tougher stance taken by HMRC to Patent Box claims, as part of the UK government’s drive to combat fraud. First-time claimants were down 18% against the previous financial year. As usual, “large” companies made 94 % of the tax relief claims.

But most likely, it is the lack of awareness by potential claimants, especially SMEs, perhaps when so many other financial issues are requiring a CFO’s attention in these tough economic times.

The Future

The statis in the statistics raises the concern that ‘UK PLC’ is not any further forward in benefiting from this corporation tax relief, despite the clear benefit to companies, as corporation tax went up to 25% in April 2023. An annual corporation tax rate of 10% is a very significant saving.

Is this a problem in publicising the scheme? Maybe. Is this also a problem in the understanding that the level of innovation needed is not high, and the belief that what companies are working on is not innovative enough to be patented? Perhaps.

Murgitroyd has a dedicated team of Patent Attorneys who are astute in seeing how the patent system can be made to work for companies who want to claim Patent Box tax relief. We are specialists in guiding you through patent process and obtaining patent protection suited for Patent Box claims. See our patent box service page for more information, or speak with your Patent Attorney today about reducing your tax burden.