On 14 September 2016 HMRC released statistics on the uptake of the patent box legislation during the first year it was in force. The legislation went into effect in relation to profits earned after 1 April 2013 and is being phased in gradually with full benefits available as from 1 April 2017.
The patent box regime applies a 10% rate of corporation tax to profits attributable to patents and equivalent forms of intellectual property. A deduction is given based on the level of profits relating to the intellectual property, bringing down the effective tax rate to 10%. As this tax regime is still being phased in the 10% rate will only be available from 2017/18.
The statistics relate to the year from 1 April 2013 to 31 March 2014. These statistics have only just become available because companies are given two years after the end of the relevant accounting period to claim relief under the patent box regime. The relevant data has therefore been published now for the first time.
The statistics reveal that in 2013/14 a total of 700 companies claimed patent box tax relief and the total value of the tax relief claimed was GDP 342.9 million. Of these claimants 225 were large companies and they claimed more than 95% of the total tax relief. 175 of the companies claiming relief were classified as medium sized and they claimed GBP 11.8 million or 3.4% of the total tax relief. Just over 1% of the total relief was claimed by 170 small companies and 120 micro companies.
There is also an analysis of the statistics by type of company claiming relief. The highest value of patent box tax relief was claimed by companies in manufacturing (445 companies); and in wholesale, retail and transport (115 companies). The manufacturing companies claimed the highest amount of relief amounting to GBP 216.9 million; and companies classified as “IT, financial services and real estate” claimed GBP 58.5 million of relief under the patent box provisions.