Patent Box Scheme

Patent Box Scheme: Reduce Tax on Innovation Income with FI Group

The UK’s Patent Box scheme offers a significant tax incentive for innovative companies. By applying a reduced corporation tax rate to profits earned from patented inventions, the Patent Box Tax Relief rewards businesses that develop and commercialise IP in the UK.

At FI Group, we help companies identify qualifying IP, calculate relevant profits, and prepare robust claims to maximise the benefits of this valuable regime. Combined with R&D Tax Relief, Patent Box can significantly enhance your innovation ROI.

What Is the Patent Box Scheme?

The Patent Box is a government initiative that allows companies to apply a reduced 10% corporation tax rate to profits earned from qualifying intellectual property (IP). This applies to income from:

Licensing or selling patented products
Product sales incorporating patented technology
Patent-related services and royalties
Patent infringement settlements or damages

To qualify, companies must:

Be liable to UK Corporation Tax
Own or exclusively license a granted UK or European patent
Have significantly contributed to the development or commercialisation of the IP

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How the Patent Box Works

The scheme involves a complex calculation to identify and ring-fence relevant IP-derived income. This includes:

Identifying qualifying IP rights
Calculating the total relevant IP income (RIPI)
Allocating profits to patented activities
Applying the reduced 10% tax rate to those profits

From 2021, the Nexus fraction is applied — linking Patent Box benefits to the proportion of R&D activity conducted by the claimant.

What Income Qualifies?

Eligible income includes:

Product or service sales involving patented components
Royalties and licence fees from patents
Proceeds from patent-related legal settlements
Embedded patent income (software, pharma formulations, etc.)

FI Group can help determine if your income streams qualify even if the patent covers only a small part of a product.

How FI Group Supports Patent Box Claims

Our Patent Box experts work closely with your finance, tax, and R&D teams to:

Identify qualifying patents and IP income sources
Model potential tax savings and forecast relief
Segment accounts to isolate relevant income and costs
Align Patent Box claims with R&D tax credit submissions
Liaise with HMRC to ensure compliance and minimise risk

We also work with IP attorneys and tax advisers to support:

Patent strategy and portfolio planning
Licensing agreements and IP structuring
Cross-border considerations for global patent portfolios

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How FI Group Supports Patent Box Claims

Our Patent Box experts work closely with your finance, tax, and R&D teams to:

Identify qualifying patents and IP income sources
Model potential tax savings and forecast relief
Segment accounts to isolate relevant income and costs
Align Patent Box claims with R&D tax credit submissions
Liaise with HMRC to ensure compliance and minimise risk

We also work with IP attorneys and tax advisers to support:

Patent strategy and portfolio planning
Licensing agreements and IP structuring
Cross-border considerations for global patent portfolios

Book A Meeting

Why Combine Patent Box and R&D Tax Relief?

Using both incentives strategically can reduce your effective tax rate and free up capital for growth. FI Group ensures:

No double counting of expenditure
Accurate tracking of R&D vs IP income
Efficient documentation for HMRC audits

This approach strengthens your innovation funding ecosystem and improves cash flow.

Who Should Consider Patent Box?

The scheme is ideal for:

Technology-driven businesses with granted patents
Software companies with patented algorithms or processes
Life sciences and pharma firms with IP-protected products
Engineering and manufacturing businesses

Even SMEs with a single patent may benefit significantly.

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Our specialised bid management team is aligned to your sector, ensuring proposals reflect the latest industry advancements while maintaining alignment with regulatory and strategic priorities.

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Why Choose FI Group?