Member Article

Patent Box: Claims continue to rise but SMEs are not taking full advantage, says Withers & Rogers

The total value of claims for tax relief under the UK’s Patent Box regime has increased again, according to data released today (Thursday 10th October 2019) by HM Revenue & Customs (HMRC). However, SMEs are still not taking full advantage of the relief, according to European intellectual property firm, Withers & Rogers.

The statistics show that 1,120 companies in the UK claimed £993 million in relief under the Patent Box regime in 2017-18 and these partial figures will be revised upwards as more data for this fiscal year becomes available. Forecasts based on the pattern of claims seen in previous years suggest that the total value of the claims for 2017-18 could rise to £1,125 million, up from £1,035 million in 2016-17 – an increase of 9 per cent.

Michael Jaeger, partner and patent attorney at intellectual property firm, Withers & Rogers, said:

“This increase in the value of claims is promising and shows that companies are making use of the scheme. However, the volume of companies making claims has not increased at all – in fact, based on the partial figures for 2017-18, the total number of claimants is 1,120, down from 1,170 in 2016-17.

“It is also evident from the data that SMEs1 are not taking full advantage of the scheme. While they accounted for 51 per cent of the total volume of claims, according to the partial data for 2017-18, they are only responsible for just under 5 per cent of their total value.”

According to HMRC’s data, manufacturers are making the most claims, followed by businesses in wholesale, retail and repair, but some other sectors are making fewer claims that we might expect to see – for example fintech, as well as the construction and transport sectors. The partial data for 2017-18 indicates that 605 manufacturers claimed tax relief under the Patent Box scheme in 2017-18, with a cumulative value of £240 million.

Michael Jaeger comments:

“These figures show that some sectors are making much better use of Patent Box relief than others and this could be either because they are unaware of the scheme or they are put off by the complexity of some of the calculations. Innovative businesses of all sizes should ensure they are making the most of this valuable opportunity to reduce their tax liability and secure a bigger share of the profits generated by their patented inventions.”

1 The data for SMEs comprises companies categorised as ‘Medium’ or ‘Small’ in HMRC’s report but does not include ‘Micro’ companies.

This was posted in Bdaily's Members' News section by Withers & Rogers .