HM Revenue and Customs (HMRC) has recently published annual statistics relating to the UK's Patent Box tax relief scheme for the tax year 2019 to 2020. As explained in a bit more detail in my previous article relating to the update from the tax year 2018 to 2019, the UK Patent Box enables companies to apply a lower rate of Corporation Tax in the UK to profits earned after 1 April 2013 from qualifying patented inventions and equivalent forms of intellectual property.
The present update for 2019 to 2020 indicates that 1,395 companies claimed relief under the Patent Box, and the total value of relief claimed was £1,220 million. This is a slight reduction in number of companies claiming (in 2018 to 2019; 1,405 companies) but an increase in total value claimed (in 2018 to 2019; £1,129 million), which maintains the trend of ever increasing value of relief claimed year on year from its introduction in tax year 2013 to 2014.
Another increase of note relates to the tax relief claimed by value by "Large" companies. In the statistics, 28% of the companies are classed as "Large" (the same % as in 2018 to 2019) but they account for 95% of the relief claimed (an increase from 92% in 2018 to 2019). Thus, not only are "Large" companies claiming for the vast majority of the tax relief by value, they are also increasing their share overall.
In Scotland, there was a decrease in the number of companies (60) claiming relief (compared to 65 companies in 2018 to 2019) which equates to a reduction from 5% to 4% of the total number of companies. However, the relief claimed still amounts to 2% of the total relief claimed, and in fact has increased by £1 million from the previous year, which shows that, overall, the companies actually claiming for tax relief in Scotland increased the amount they claimed.
It appears that, as evidenced by the reduction in the number of companies claiming and the increase in the overall value claimed, there are opportunities for more businesses to benefit from this system designed to encourage companies to keep and commercialise intellectual property in the UK. Indeed, when a closer look is taken at a company's product development, there are often patentable technologies and processes that have not yet been protected (and could be used for Patent Box).
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