From 1 April 2013 the UK phased in Patent Box legislation that allows companies to apply a lower rate of corporation tax to profits earned from patented inventions and other similar forms of intellectual property (IP). The relief was initially phased in from 1 April 2013 and the full relief has been available from 1 April 2017.

Under the Patent Box legislation corporate tax is charged at a lower rate of 10% on the profits from patents and similar IP. Companies must notify HMRC within two years after the end of the accounting period when the relevant income arises if they wish to claim the relief.

Complete data is now available for 2015/2016 and partial statistics for the 2016/17 fiscal year have also been released. The 2016/17 statistics will be finalized in autumn 2019 when all the claims for that period have been received, and are expected to be revised upwards at that time.

The statistics show that in 2015-16 a total of 1,160 companies claimed Patent Box relief with a total value of GBP 754.3 million. In 2016-17 so far 1,025 companies have claimed the relief with a total value of GBP 942.5 million.

I n 2015/16 of the total companies claiming the relief 28.4% were classified as large companies, and these companies claimed 95.5% of the total relief claimed. In 2016/17 the partial statistics reveal that 27.3% of the claimants were classified as large companies and they claimed 96.3% of the total relief given.

In 2015/16 of the companies claiming the relief, 54.7% were in the manufacturing sector and 18.5% were in the wholesale and retail trade sector. In 2016/17 the partial statistics show that 54.6% of the claimants were in the manufacturing sector and 18.0% were in the wholesale and retail trade sector.

In relation to the value of relief claimed in 2015/16 companies in the manufacturing sector claimed 48.4% of the available Patent Box relief, while companies in the professional, scientific and technical activities sector claimed 12.1% of the relief. In 2016/17 companies in the manufacturing sector claimed 37.1% of the available relief and companies in the professional, scientific and technical activities sector claimed 15% of the total relief given.

The aim of the Patent Box relief was to provide an incentive for companies to increase the amount of patenting of intellectual property developed in the UK and to further develop and commercialize new patents in the UK; to manufacture and sell the innovative products or services from the UK; and to locate the jobs involved in development and exploitation of patents in the UK.