The UK Patent Box enables companies to apply a lower rate of Corporation Tax to profits earned after 1 April 2013 from their patented inventions and equivalent forms of intellectual property. The relief has been phased in from 1 April 2013 and the full benefit of the Patent Box will be available from 1 April 2017. The lower rate of Corporation Tax under the Patent Box is 10%.
Companies must notify HMRC if they wish to claim relief under the Patent Box. This has to be done within two years after the end of the accounting period in which the relevant profits and income arise. Given this time lag, a complete set of data for the first year of the Patent Box – covering the period 1 April 2013 to 31 March 2014, known as the 2013-14 fiscal year – has only recently become avaialble. This data is published for the first time in this release.
The 2013-14 data shows that most of the relief claimed under the Patent Box was by large and medium sized companies, by companies in the ‘Manufacturing’ sector, and by companies based in London, the East of England and Yorkshire & Humberside.
In 2013-14, 700 companies claimed relief under the Patent Box with a total value of £342.9 million.
Just under one third of the companies (225 or 32.1% of total) were large and together they claimed £327.2 million of relief under the Patent Box (95.4% of the total).
Most companies were in ‘Manufacturing’ (445 or 63.6% of the total). The second highest number were in ‘Wholesale & Retail and Transport’ (115 or 16.4% of the total).
Companies in ‘Manufacturing’ claimed the highest value of relief under the Patent Box (£216.9 million or 63.3% of the total) followed by companies in ‘IT, Financial Services and Real Estate’ (£58.5 million or 17.1% of the total).
The number of companies claiming relief under the Patent Box varies across UK regions. The highest number were located in the South East (115 or 16.4% of the total) and the lowest number were in Northern Ireland (15 or 2.1% of the total).
The value of relief claimed under the Patent Box also varies widely across UK regions. Companies in London claimed the most (£196.8 million or 57.4% of the total) while companies in the North East claimed the least (£1.6 million or 0.5% of the total).