Patent Box relief statistics: September 2023
Updated 28 September 2023
© Crown copyright 2023
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This publication is available at https://www.gov.uk/government/statistics/patent-box-reliefs-statistics/patent-box-relief-statistics-september-2023
1. Main Points
The key findings in this year’s publication are that:
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in the tax year 2021 to 2022, it is estimated that 1,510 companies elected into Patent Box. This is slightly lower than in the previous year when the number of companies reached 1,610.
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conversely, the value of relief claimed under the Patent Box went up from £1,196 million in the tax year 2020 to 2021 to £1,363 million in the tax year 2021 to 2022. This was primarily driven by large companies claiming more tax relief on average.
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of the companies that elected into Patent Box in tax year 2021 to 2022, 24% were classified as ‘Large’ and these companies accounted for most of the relief claimed (94%).
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over half (920) of the companies in tax year 2021 to 2022 were in the Manufacturing sector, accounting for 44% of the relief.
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the number of companies claiming relief varies significantly across UK regions. The area with the fewest number of companies was the North East (3% of the total in tax year 2021 to 2022), and the area with the most companies was the South East (15%); although London-based companies claimed the largest amount of relief (44%).
It should be noted that an update has been made to this release to provide a more complete view of the number of companies utilising the Patent Box. From this publication onwards, all companies who choose to elect into the Patent Box are included in the total company numbers, regardless of whether they have IP profits eligible for Patent Box relief. Further details regarding this change and its impacts can be found in Section 3.
2. Introduction
About these statistics
This is an Official Statistics publication produced by HM Revenue & Customs (HMRC). It provides information on the number of companies choosing to elect into the UK Patent Box, the value of this tax relief from tax year 2013 to 2014 to tax year 2020 to 2021, and projected statistics on relief for tax year 2021 to 2022.
Section 1 gives a summary of the key Patent Box findings and statistics. Section 3 provides background information regarding the introduction of the relief. Section 4 provides data broken down by company size, industry sector, UK region and value of claim. Section 5 gives some background information about the Patent Box and how these statistics have been produced.
The amounts of relief claimed under the Patent Box have been rounded to the nearest £1,000,000 and the numbers of companies have been rounded to the nearest 5. Some data has been supressed to meet confidentiality requirements. Because of rounding and suppression some breakdown figures may not add up to provided totals.
These statistics are produced to the professional standards set out in the Code of Practice for Official Statistics (2009). For more information on the statistics produced by public bodies, please visit the UK Statistics Authority website.
HMRC Official and National Statistics can be found on HMRC’s statistic’s page.
Who might be interested in these statistics?
This publication is likely to be of interest to policy makers in government, academics, research organisations, international bodies, the media and patent holding businesses.
3. Background
The UK Patent Box enables companies to apply a lower rate of Corporation Tax to profits earned after 1 April 2013 from qualifying patented inventions and equivalent forms of intellectual property. The relief was phased in from 1 April 2013 and the full benefit of the Patent Box has been available from 1 April 2017. The lower rate of Corporation Tax under the Patent Box is 10% compared with the main rate of Corporation Tax, which ranges from 19% to 25% depending on the accounting period.
Companies must notify HMRC if they wish to elect into the Patent Box. This must 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 period 1 April 2020 to 31 March 2021, known as the 2020 to 2021 fiscal year, has only recently become available. These data are updated from last year’s release.
This release includes projected statistics for the tax year 2021 to 2022. The 2021 to 2022 figures will be updated based on a complete set of data in the next annual release (Autumn 2024). The projections have been made based on the number of claims that have been made so far, and the previous year’s data of the number of claims that are usually made later on.
An update has been made to this release to provide a more complete view of the number of companies utilising the Patent Box. In prior releases, if a company elected into the Patent Box but was unable to receive any relief in a given year, it was excluded from the statistics for that year. Going forward, all companies that chose to make a Patent Box election will be recorded as such for each year the election is made. The total numbers of companies elected into the Patent Box has therefore been revised and has increased compared with previous publications. To demonstrate the impact of this adjustment, an additional section has been created in 4.5 below and additional Tables 9 and 10 have been included in Section 7 to show the distribution of companies electing into the Patent Box by the value of the relief they claim each year. Companies that elected into the Patent Box but claimed no relief in the period are clearly shown in the table.
4. Distribution of Patent Box data
4.1 Distribution by year
In the tax year 2021 to 2022, it is estimated that 1,510 companies elected into Patent Box, lower than the 1,610 companies in the previous year. The total value of relief claimed under the Patent Box went up from £1,196 million in the tax year 2020 to 2021 to £1,363 million in the tax year 2021 to 2022. This was primarily driven by large companies claiming more tax relief on average.
Over the period since its introduction the value of relief has increased as the rate has been phased in, with the exception of relief claimed in the tax year 2020 to 2021. The COVID-19 pandemic will have impacted the ability of elected companies to profit from their eligible IP. Although the pandemic presented an opportunity for certain elected companies to commercialise their innovations, others were negatively impacted by pandemic restrictions and the net effect was a fall in the total value of the Patent Box relief.
Based on current projections, the total value of the relief is expected to grow in tax year 2021 to 2022. The number of companies choosing to elect into the Patent Box grew marginally in tax year 2020 to 2021, though based on partial data we expect this number to drop slightly in tax year 2021 to 2022.
Figures 1 and 2 below display the total volume of companies by sector choosing to elect into the Patent Box and total value of claims from tax year 2013 to 2014 to tax year 2021 to 2022. Figures for tax year 2021 to 2022 are projections.
Figure 1: Number of companies choosing to elect into the Patent Box by sector from 2013-14 to 2021-22
Figure 2: Total amount of relief claimed by sector from 2013-14 to 2021-22
4.2 Distribution by company size
In tax year 2021 to 2022, it is projected that large companies claimed 94% of the relief, representing 24% of the elected companies. This is comparable to tax year 2020 to 2021, when large companies claimed 94% of the relief. Company size breakdowns are based on the European Union Enterprise Size Classification (see Annex A), and a full table of results by company size can be found in Annex B.
4.3 Distribution by industry sector
Many companies that undertake research and development also manufacture and/or sell their products either wholesale or retail, which explains the contribution of these sectors to the Patent Box; in tax year 2021 to 2022, 44% of the total amount claimed was from groups in the manufacturing sector. Research and development is expected to be common within the ‘Professional, Scientific and Technical’ sector, with groups in this sector making up 16% of the total relief claimed in tax year 2021 to 2022. Comparing to tax year 2020 to 2021, projected figures suggest these sectors combined will continue to make up a majority of both the number of elected companies and the total relief.
These sectors are based on the Standard Industrial Classification (SIC) 2007. More details on the SIC 2007 can be found in Section 5. Full sector breakdowns can be found in Annex B.
Entities can sometimes be reclassified between releases, which means that a company, and the claim value associated with that company, may appear in a different sector in this year’s release compared to previous publications.
4.4 Distribution by region
In tax year 2021 to 2022, it is projected that London-based companies claimed the largest amount of relief (44%). Similarly, London companies claimed the largest amount of relief (45%) in tax year 2020 to 2021.
The geographic breakdowns shown in this section are based on the UK Government Office Regions (see Section 5 for more information). When interpreting these statistics, it should be noted that companies can have a single address for tax purposes (for example, a headquarters location) even though they may have operations across the UK. This analysis is based on taxpayers’ addresses given to HMRC for tax purposes so may or may not represent where the economic activity takes place. As such they should be treated with caution.
4.5 Distribution by claim size
In tax year 2021 to 2022, the top 275 companies (by the value of the relief they claim each year) accounted for more than 97% of the relief. 70 companies that had elected into the Patent Box claimed no relief in the same fiscal year, approximately 5% of the total.
5. Background information
The UK Patent Box was introduced in the Finance Act 2012, effective from 1 April 2013, having been announced in the 2010 Corporate Tax Roadmap. It applies a lower rate of Corporation Tax (10%, as compared with a main rate of 19% in tax year 2021 to 2022) to profits attributable to patents and equivalent forms of intellectual property (IP). This is delivered by an additional deduction, based on the level of IP profits so that the benefit to the company is equivalent to that of a lower rate. The benefit was phased in, with companies fully benefitting from the 10% rate from 2017 to 2018.
The aim of the Patent Box is to provide additional incentive for companies to:
- increase the level of patenting of IP developed in the UK, and ensure that new and existing patents are further developed and commercialised in the UK
- manufacture and sell those innovative products and services from the UK
- locate the high-value jobs associated with the development, manufacture and exploitation of patents in the UK
In 2016 the government made changes to the design of the Patent Box to comply with a new international framework for preferential tax regimes for IP set out by the Organisation for Economic Co-operation and Development (OECD).
This means that the amount of profit from an IP asset which can qualify for the reduced 10% rate of Corporation Tax available through the Patent Box will depend on the proportion of the asset’s development expenditure incurred by the company.
Data sources and reliability of the estimates
The Patent Box statistics in this release are compiled using data collected from electronically filed company tax returns. The Corporation Tax computations, where companies are elected into the Patent Box, are submitted to HMRC in iXBRL (electronic) format. This allows companies to electronically ‘tag’ their Patent Box claim so that the number and value of each claim can be extracted automatically.
Tagging errors
Some Patent Box claims do not have the correct iXBRL ‘tag’ applied to them. Further review and scanning of tax computation documents was therefore required to identify computations containing relevant terms such as ‘Patent Box’ or ‘Patent Relief’ that would otherwise be missed.
HMRC is currently working to improve and extend its electronic text reading capabilities to routinely ‘read’ all documents submitted as part of the company tax return. While this will make it easier to find Patent Box claims in future, we expect there to be little impact on the figures provided in this publication because of the manual review work and extra quality assurance undertaken in preparing the statistics.
All of the tax computations identified via the iXBRL ‘tagging’ or text reading processes outlined above were then manually reviewed to:
- ensure that the tags were used correctly for Patent Box claims
- extract the value of the claim if found by text reading and confirm the position in other years where there was no apparent claim
- ensure that when amendments to returns were made only the difference in amounts was recorded to avoid double counting
Industry sector information
Companies in HMRC’s data are allocated a Standard Industrial Classification (SIC) 2007 code that best describes a company’s primary economic activity.
However, some companies engage in more than one type of economic activity. The industry sector breakdown in this publication does not necessarily indicate where a company’s research and development activity takes place. For example, a company primarily doing manufacturing (and therefore allocated to the ‘Manufacturing’ sector) could also have a branch undertaking research and development activity in the ‘Scientific’ sector. For this reason, the industry sector information should be viewed as only a broad picture as to where activity takes place.
Geographic information
The geographic information in this publication is based on the addresses given by companies elected into the Patent Box. The location of this address is not necessarily where a company’s research and development, manufacturing, or other activity takes place. Companies provide a Registered Office address to HMRC for communication purposes but can have business activities located in other UK regions.
Revisions to published information
The Patent Box figures are subject to revision. Although the majority of returns are finalised within two years of the end of the company’s accounting period, there are exceptional cases which can take longer. As a result, there is no specific point at which data for the latest year can be considered as complete and final. In practice, the statistics are revised to replace any figures marked as provisional in the previous release of the statistics. However, where the revision to a year is particularly small and would lead to the potential disclosure of individual companies, these revisions will be suppressed (based on our standard approach to statistical disclosure control) until a subsequent release.
Planned developments and changes
Frequency of publication
HMRC plans to publish these Patent Box statistics annually as each year of data becomes available from company tax returns.
Statistics alignment
Because of the way the Patent Box is designed, a complete set of annual data of the relief for any given year becomes available only after two years from the end of that given year. In the past this has meant that Patent Box statistics lag behind by at least one year compared to other tax statistics produced by HMRC.
To align Patent Box statistics with the rest of HMRC publications we have published provisional projected statistics for tax year 2021 to 2022 based on claims made up to and including June 2023. This is based on analysis of Patent Box claims made for previous fiscal years which shows that, on average, 91% of Patent Box claims are made by the end of the June of the second year after the end of the accounting period. The statistics will be updated based on the complete set of Patent Box claims relating to tax year 2021 to 2022 in the next annual release (planned for Autumn 2024).
User engagement
HMRC is committed to providing impartial quality statistics that meet our users’ needs. We encourage our users to engage with us so that we can improve our National and Official Statistics and identify gaps in the statistics that we produce. Please see the HMRC Statistics ‘Continuous User Engagement Strategy’.
If you would like to comment on these statistics or have any enquiries, please use the statistical contacts named at the end of this section and on the cover page.
UK Statistics Authority assessment
This publication has yet to be assessed for compliance with the Code of Practice for Official Statistics by the UK Statistics Authority (UKSA). This means that the figures in this publication are not yet classified as National Statistics, but as Official Statistics.
UKSA is an independent body directly accountable to Parliament with the overall objective to promote and safeguard the production and publication of official statistics. It is also required to promote and safeguard the quality and comprehensiveness of official statistics and good practice in relation to official statistics.
Please refer to UKSA’s website for more details about the assessment process:
We aim to ready this publication for UKSA assessment in the future.
Contact points
Enquiries about these statistics should be directed to:
J Hogg
KAI Direct Business Taxes
HM Revenue & Customs
4A India Buildings, 31 Water Street
Liverpool L2 0RD
Telephone: 03000 506682
E-mail: ct.statistics@hmrc.gov.uk
For enquiries relating to the Patent Box policy please contact:
J James
CT Innovation and Growth
Business, Assets and International
HM Revenue & Customs
100 Parliament Street
London SW1A 2BQ
Telephone: 03000 594901
E-mail: ct.statistics@hmrc.gov.uk
Media enquiries should be directed to the HMRC Press Office contacts listed on the front page of this release.
For general or other enquiries please refer to HMRC’s website.
6. Annex A: Company size definitions
The size of a company is based on the European Union Enterprise Size Classification as shown in the following table:
Table 1: Company size definition table
| European Union Enterprise Size Classification | Turnover (€ million) | Total assets (€ million) | Number of employees |
|---|---|---|---|
| Micro | 2 | 2 | 9 |
| Small | 10 | 10 | 49 |
| Medium | 50 | 43 | 249 |
| Large | >50 | >43 | 250+ |
The values shown are upper limits (except for the ‘Large’ category). To be classified as a certain size, a company must meet the employee limit and one or other of the turnover and total assets limits. Information on turnover, total assets and number of employees comes from various internal and external sources. Where this information is missing companies have been grouped into the ’Unknown’ category.
7. Annex B: Publication tables
Notes to the Tables:
If the proportion of later returns are the same as in previous years then the total value of claims for tax year 2021 to 2022 is likely to be around £1,363 million.
The number of companies refers to the number of companies that have elected into the Patent Box, regardless of whether they have IP profits eligible for Patent Box relief. Amounts of the relief have been rounded to the nearest £1,000,000 and the number of companies have been rounded to the nearest five. Figures might not add up to totals due to this rounding.
A hyphen (‘-‘) indicates figures have been suppressed to meet confidentiality requirements.
The next update of these tables is planned for Autumn 2024. This will provide revised figures for tax year 2021 to 2022 and provisional statistics for tax year 2022 to 2023.
Table 2: Claims by year
| Year | Number of companies | Amount of relief claimed (£ million) |
|---|---|---|
| 2013-14 | 835 | 376 |
| 2014-15 | 1,175 | 658 |
| 2015-16 | 1,295 | 770 |
| 2016-17 | 1,425 | 1,047 |
| 2017-18 | 1,540 | 1,142 |
| 2018-19 | 1,575 | 1,164 |
| 2019-20 | 1,600 | 1,240 |
| 2020-21 | 1,610 | 1,196 |
| 2021-22 (projection) | 1,510 | 1,363 |
Table 3: Patent Box data by company size 2020-21
| Company size | Number of companies | Number of companies as a percentage of total | Amount of relief claimed (£ million) | Amount of relief claimed as a percentage of the total claimed |
|---|---|---|---|---|
| Large | 440 | 27% | 1,130 | 94% |
| Medium-sized | 410 | 26% | 45 | 4% |
| Small | 425 | 26% | 17 | 1% |
| Micro | 330 | 20% | 4 | <1% |
| Unknown | - | - | - | - |
| Total | 1,610 | 100% | 1,196 | 100% |
Table 4: Patent Box data by company size 2021-22 (projection)
| Company size | Number of companies | Number of companies as a percentage of total | Amount of relief claimed (£ million) | Amount of relief claimed as a percentage of the total claimed |
|---|---|---|---|---|
| Large | 360 | 24% | 1,275 | 94% |
| Medium-sized | 390 | 26% | 53 | 4% |
| Small | 410 | 27% | 24 | 2% |
| Micro | 335 | 22% | 6 | <1% |
| Unknown | 15 | 1% | - | - |
| Total | 1,510 | 100% | 1,363 | 100% |
Table 5: Patent Box data by industrial sector 2020-21
| Standard Industrial Classification | Number of companies | Number of companies as a percentage of total | Amount of relief claimed (£ million) | Amount of relief claimed as a percentage of the total claimed |
|---|---|---|---|---|
| A. Agriculture, Forestry and Fishing | 25 | 2% | 2 | <1% |
| B. Mining and Quarrying | 10 | 1% | - | - |
| C. Manufacturing | 980 | 61% | 445 | 37% |
| D. Electricity, Gas, Steam and Air Conditioning Supply | - | - | - | - |
| E. Water Supply | 10 | 1% | - | - |
| F. Construction | 50 | 3% | 3 | <1% |
| G. Wholesale and Retail Trade | 175 | 11% | - | - |
| H. Transportation and Storage | 10 | 1% | - | - |
| I. Accommodation and Food Service Activities | - | - | - | - |
| J. Information and Communication | 60 | 4% | 134 | 11% |
| K. Financial and Insurance Activities | 5 | <1% | - | - |
| L. Real Estate Activities | - | - | - | - |
| M. Professional, Scientific and Technical Activities | 150 | 9% | 176 | 15% |
| N. Admin | 80 | 5% | 163 | 14% |
| O. Public Admin, Defence and Social Services | - | - | - | - |
| Q. Human Health and Social Work Activities | 15 | 1% | - | - |
| R. Arts, Entertainment and Recreation | 5 | <1% | - | - |
| S. Other Service Activities | 25 | 1% | - | - |
| Unknown | - | - | - | - |
| Total | 1,610 | 100% | 1,196 | 100% |
Table 6: Patent Box data by industrial sector 2021-22 (projection)
| Standard Industrial Classification | Number of companies | Number of companies as a percentage of total | Amount of relief claimed (£ million) | Amount of relief claimed as a percentage of the total claimed |
|---|---|---|---|---|
| A. Agriculture, Forestry and Fishing | 30 | 2% | 2 | <1% |
| B. Mining and Quarrying | 5 | 1% | - | - |
| C. Manufacturing | 920 | 61% | 597 | 44% |
| D. Electricity, Gas, Steam and Air Conditioning Supply | - | - | - | - |
| E. Water Supply | 10 | 1% | - | - |
| F. Construction | 55 | 4% | 5 | <1% |
| G. Wholesale and Retail Trade | 160 | 11% | 51 | 4% |
| H. Transportation and Storage | 5 | <1% | - | - |
| I. Accommodation and Food Service Activities | - | - | - | - |
| J. Information and Communication | 55 | 4% | 123 | 9% |
| K. Financial and Insurance Activities | - | - | - | - |
| L. Real Estate Activities | - | - | - | - |
| M. Professional, Scientific and Technical Activities | 125 | 8% | 222 | 16% |
| N. Admin | 70 | 5% | - | - |
| O. Public Admin, Defence and Social Services | - | - | - | - |
| Q. Human Health and Social Work Activities | 10 | 1% | 1 | <1% |
| R. Arts, Entertainment and Recreation | 5 | <1% | - | - |
| S. Other Service Activities | 20 | 1% | 2 | <1% |
| Unknown | 10 | 1% | - | - |
| Total | 1,510 | 100% | 1,363 | 100% |
Table 7: Patent Box data by UK region 2020-21
| Government Office Region (GOR) | Number of companies | Number of companies as a percentage of total | Amount of relief claimed (£ million) | Amount of relief claimed as a percentage of the total claimed |
|---|---|---|---|---|
| East England | 200 | 12% | 202 | 17% |
| East Midlands | 125 | 8% | 18 | 2% |
| London | 160 | 10% | 541 | 45% |
| North East | 40 | 2% | 13 | 1% |
| North West | 145 | 9% | 34 | 3% |
| Northern Ireland | 60 | 4% | 13 | 1% |
| Scotland | 75 | 5% | - | - |
| South East | 260 | 16% | 168 | 14% |
| South West | 155 | 10% | 53 | 4% |
| Wales | 65 | 4% | 17 | 1% |
| West Midlands | 165 | 10% | 25 | 2% |
| Yorkshire and The Humber | 160 | 10% | 33 | 3% |
| Unknown | 5 | <1% | <1 | <1% |
| Total | 1,610 | 100% | 1,196 | 100% |
Table 8: Patent Box data by UK region 2021-22 (projection)
| Government Office Region (GOR) | Number of companies | Number of companies as a percentage of total | Amount of relief claimed (£ million) | Amount of relief claimed as a percentage of the total claimed |
|---|---|---|---|---|
| East England | 195 | 13% | - | - |
| East Midlands | 120 | 8% | 18 | 1% |
| London | 145 | 10% | 594 | 44% |
| North East | 45 | 3% | 11 | 1% |
| North West | 140 | 9% | 66 | 5% |
| Northern Ireland | 55 | 4% | 25 | 2% |
| Scotland | 60 | 4% | - | - |
| South East | 225 | 15% | 143 | 10% |
| South West | 150 | 10% | 45 | 3% |
| Wales | 60 | 4% | 12 | 1% |
| West Midlands | 145 | 10% | 35 | 3% |
| Yorkshire and The Humber | 165 | 11% | 47 | 4% |
| Unknown | 10 | 1% | - | - |
| Total | 1,510 | 100% | 1,363 | 100% |
Table 9: Patent Box data by value of claim 2020-21
| Value of Claim | Number of companies | Number of companies as a percentage of total | Amount of relief claimed (£ million) | Amount of relief claimed as a percentage of the total claimed |
|---|---|---|---|---|
| £0 | 95 | 6% | - | - |
| £1 to £2,000 | 160 | 10% | <1 | <1% |
| £2,001 to £10,000 | 290 | 18% | 2 | <1% |
| £10,001 to £25,000 | 250 | 16% | 4 | <1% |
| £25,001 to £70,000 | 290 | 18% | 12 | 1% |
| £70,001 to £200,000 | 245 | 15% | 29 | 2% |
| More than £200,000 | 275 | 17% | 1,149 | 96% |
| Total | 1,610 | 100% | 1,196 | 100% |
Table 10: Patent Box data by value of claim 2021-22 (projection)
| Value of Claim | Number of companies | Number of companies as a percentage of total | Amount of relief claimed (£ million) | Amount of relief claimed as a percentage of the total claimed |
|---|---|---|---|---|
| £0 | 70 | 5% | - | - |
| £1 to £2,000 | 140 | 9% | <1 | <1% |
| £2,001 to £10,000 | 275 | 18% | 1 | <1% |
| £10,001 to £25,000 | 245 | 16% | 3 | <1% |
| £25,001 to £70,000 | 275 | 18% | 12 | 1% |
| £70,001 to £200,000 | 225 | 15% | 28 | 2% |
| More than £200,000 | 275 | 18% | 1,318 | 97% |
| Total | 1,510 | 100% | 1,363 | 100% |