Patent Box

Innovation Incentives - Patent Box:

The Patent Box regime allows companies to apply a reduced rate of Corporation Tax to profits earned from patented inventions and certain other innovations. It’s a powerful incentive designed to encourage UK-based innovation by significantly reducing the tax burden on commercialised intellectual property.

At Westlock Partners, we help companies unlock the full benefits of the Patent Box – from assessing eligibility through to calculating the relief and preparing the required documentation to support your claim.

What Is Patent Box?

Patent Box enables companies to apply a lower 10% Corporation Tax rate to profits attributed to patented products, processes, or technologies. This is a substantial reduction compared to the standard 25% rate.

Qualifying income includes:

  • Sales of patented products (or products incorporating a patented component)

  • Patent royalties and licensing income

  • Sale of patents or patent rights

  • Damages or compensation from patent infringement cases

  • Embedded IP income within broader technology or software platforms

Who Can Claim?

To benefit from Patent Box, your company must:

  • Be liable to UK Corporation Tax

  • Own or exclusively license-in qualifying patents granted by the UKIPO, EPO, or certain EEA countries

  • Have undertaken qualifying development on the patented invention

  • Be actively exploiting the patent (e.g., manufacturing, selling, licensing, etc.)

Patent Box often goes hand-in-hand with R&D tax relief, but requires a separate, technically robust calculation and election process.

How We Can Help

Patent Box calculations can be complex, involving not only the identification of qualifying IP but also the disaggregation of income streams and detailed profit apportionment. Our team provides:

  • Strategic assessment of eligibility

  • Patent mapping and income stream identification

  • Nexus fraction calculations

  • HMRC election submission support

  • Integration with your R&D tax relief claims

Our Process:

  • • Our advisors conduct a comprehensive review of your IP portfolio and business activities to determine eligibility for the Patent Box scheme. We evaluate your patents and related IP assets to ensure they meet the criteria set out by HMRC.

  • • We work with you to identify the relevant profits that can be attributed to your patented products and services. Our team uses the appropriate calculation methods to determine the portion of your profits that qualify for the reduced tax rate under the Patent Box.

  • • Our experienced consultants assist in preparing all the necessary documentation for your Patent Box claim. We ensure your application is accurate, complete, and compliant with HMRC requirements, reducing the risk of delays or rejections.

  • • After your claim is submitted, we provide ongoing support to manage your compliance obligations and reporting requirements. Our team helps you maintain clear records and documentation to support your claim in case of an HMRC audit.

  • • Beyond the Patent Box claim process, we offer strategic advice on managing your IP portfolio to maximise tax benefits. Our consultants help you develop strategies for patenting new inventions and optimising the structure of your IP assets.

The Westlock Difference:

  • • Our partner-led approach sets us apart as it ensures that each engagement is guided by experienced professionals with deep industry knowledge and hands-on expertise. This approach provides several distinct advantages:

    1. Expert Oversight: Our partners are actively involved in every phase of the engagement, from initial assessment to claim submission, ensuring high-quality work and personalised attention.

    2. Tailored Solutions: With direct partner involvement, we offer customised advice and strategies based on the specific needs and challenges of your business, rather than a one-size-fits-all approach.

    3. Consistency & Accountability: Our partners, as the main points of contact, maintain consistency in communication and are personally accountable for the success of the project. This leads to more effective decision making and stronger client relationships.

    4. Highest Quality Standards: Our partners have extensive experience and industry knowledge, rigorously oversee the work to ensure that every deliverable meets the highest professional and regulatory standards.

    Our commitment to delivering a superior, partner-led service is paramount to maximising client outcomes and ensuring long-term success.

  • • The Westlock Partners Protocol (WPP) is our internal quality control framework, designed to ensure that every deliverable is produced to the highest of standards. It is a structured approach encompassing rigorous internal quality checks, an independent partner review, and client collaboration to achieve excellence in every project.

  • • Westlock 360 Insights & Advisory is a hallmark of our proactive, partner-led approach designed to keep our clients ahead of legislative changes that impact heir tax and financial position. Through this initiative, we are aiming to ensure that clients receive timely, direct communication from us on any updates in legislation, allowing for effective planning and adjustment of their financial strategies accordingly. Our ongoing strategic planning and advisory services are not limited to year-end reviews but instead involve year-round consultations. This ensures that our clients’ future Patent tax relief claims are optimised to benefit from any legislative changes announced earlier in the year. By actively monitoring these developments, we ensure that every opportunity to maximise claims is identified and implemented early, driving the best outcomes for our clients.