How is the benefit calculated?

The first step is to map the company’s IP rights to its sources of income, which may include: Product and bespoke spare parts sales Royalties, milestones and licence fees Patent sales Damages for infringement or other compensation payments Services income or income from patented processes Once this mapping is complete, the relevant profits are identified, and the reduced 10% tax rate is applied.

Patent Box Tax Relief

Patent Box Tax Relief

Patent Box is one of the UK’s most valuable tax incentives, allowing innovative businesses to reduce their Corporation Tax rate to as low as 10% on profits generated from patented technologies. Available across all industries, Patent Box supports companies that retain, protect, and commercialise intellectual property in the UK.

What is Patent Box and who can benefit?

Patent Box provides a reduced effective rate of Corporation Tax on qualifying profits derived from patents. To qualify, companies must:

Hold a qualifying Intellectual Property (IP) right or an exclusive licence to such rights. These are typically granted patents or patent-equivalent rights.
Meet the development condition, either through their own development of the patented technology or via development activities carried out by another group company.
Where part of a group, meet the active ownership condition, demonstrating that they actively manage the exploitation of the IP right or licence.

The first step is to map the company’s IP rights to its sources of income, which may include:

Product and bespoke spare parts sales
Royalties, milestones and licence fees
Patent sales
Damages for infringement or other compensation payments
Services income or income from patented processes

Once this mapping is complete, the relevant profits are identified, and the reduced 10% tax rate is applied.

How Azets can support your Patent Box claim

Our specialist advisers will work with you to:

Review your existing IP portfolio and assess the benefits of making a UK Patent Box election.
Advise on whether the time is right to elect into the regime based on your wider tax and commercial strategy.
Support you in structuring your IP to maximise benefits under current legislation.
Compile a schedule of products and services associated with qualifying patents to ensure your claim is accurate and maximised.

We also have strong links to patent attorneys and can draw on these connections to ensure patents are developed and structured correctly from the outset. Patent Box is highly complex, but our specialists take that complexity off your shoulders so you can focus on running your business while we ensure your tax position is fully optimised.

Contact a specialist

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