Patent owners to recover £1.1bn in tax relief, HMRC reveals
UK patent owners are on track to recover £1.13 billion ($1.4 billion) in tax relief from patents for the year 2018-2019, an increase of £29 million compared to the previous year, according to new figures released today by HM Revenue and Customs (HMRC).
The figures were unveiled in an annual report on Patent Box tax reliefs, which enable companies to apply a lower rate of corporation tax to profits earned after April 1, 2013, from their patented inventions.
In 2017-18, 1,305 companies claimed relief under the Patent Box, and the total value of relief claimed was £1.1 million, according to the report.
So far in 2018-19, 1,230 companies have claimed relief under the tax relief scheme, with a total value of £992 million. But these figures are expected to be revised upwards as more data becomes available. According to the HMRC, if the proportion of late claims are the same as in previous years, then the total value of claims for 2018-19 is likely to rise by a further £138 million.
The statistics also show that the value of relief claimed increased year-on-year from 2013-14 to 2015-16 as the Patent Box was phased in, and this continued in 2016-17 and 2017-18.
Of the companies that claimed in 2017-18, 28% were classified as “large”, but these companies accounted for most of the relief claimed (92%).
More than half (715) of the companies that claimed in 2017-18 were in the manufacturing sector (including pharmaceuticals), accounting for 30% of the relief.
Meanwhile, companies in the financial and insurance sector received the highest proportion of relief (34%).
According to the report, the number of companies claiming relief varied significantly across UK regions. The north east made the fewest number of claims (2% of the total in 2017-18), and the south east (not including London) made the most (16%); while London-based companies claimed the largest amount of relief (47%).
The UK Patent Box was introduced in the Finance Act 2012. It applies a lower rate of corporation tax (10%, as compared with a main rate of 19% in 2017-18) to profits attributable to patents and equivalent forms of IP.
The benefit was phased in, with companies fully benefiting from the 10% rate from 2017-18.
According to the HMRC, the aim of the Patent Box is to provide additional incentive for companies to:
