Whilst the number of companies making claims only increased by 2% between 2014-15 and 2015-16, the value of relief generated rose sharply from £651m to £754m. Early indications suggest that this pattern will continue into 2016-17 with 1,025 claims filed to date generating £942m in relief.
Patent Box enables companies to apply a lower (reducing to as little as 10%) rate of corporation tax to profits arising from patented products and equivalent forms of intellectual property. It is also seen as a complementary relief to the UK Research & Development (R&D) tax relief regime in supporting the development and commercialisation of intellectual property in the UK.
George Bull, senior tax partner at tax consultants RSM highlighting the figures said while it is encouraging to see an uplift in claims which is unlocking greater levels of relief year-on-year, in terms of which companies benefit most from the relief, only 25% of total claims are made by large companies that benefit from 95% of total relief delivered, whilst SMEs and micro entities accounted for 75% of claims but only 5% of the value.
The sector that benefitted most from the relief was manufacturing, with just over 50% of claims made and just under 50% of the total value received. The proportions across both sector and size of company claiming the relief has remained broadly consistent over the past two years.
“These statistics certainly bear out what we see in practice, with large companies being better equipped to wade through the complexity of the Patent Box regime to make claims, and to ensure that their systems are geared towards accurate reporting for these purposes,” said Bull.
“It is also interesting to see how the statistics compare year-on-year with those for R&D tax relief. Whilst the uptake for R&D tax relief increases exponentially year-on-year, the uptake for companies claiming Patent Box appears to be beginning to plateau, which could be due to the larger businesses particularly manufacturers (which incorporates pharmaceuticals) being the ones to benefit most, whilst smaller businesses are less inclined to progress complex claims for lower values,” he added.