Patent box claims can be very positive financially for your business, but the regulations are complex which our team can help guide you through.

If you hold a patent, have undertaken R&D development activities in relation to this patented invention, and have profits arising from the sale or licensing of the patented product then patent box tax relief can be claimed. The claims can provide an effective 10% rate of tax on profits arising from patented products/services a 9% tax saving (rising to 15% from 2023 when the corporation tax rate increases).

The following income can be included in a claim where arising from the patented invention – product sales, licenses/royalties income, disposal proceeds and other sources – and whilst it may only be a small part of a product/process that has been patented, all of the income from sales of the patented product/process should qualify.

There are so many elements of the patent box that are closely linked with R&D claims, you’ll need an expert to help navigate them, we can help you optimise claims across both schemes making it worthwhile financially!

Designed to help businesses operating in the creative and film industries, this is tax relief that is worth investigating if you are within this field. Significant tax credits can be claimed and are aimed at encouraging development and production in the UK:

• Animation Relief
• High End-TV Relief
• Children’s TV Relief
• Video Games Relief
• Film Tax Relief
• Theatre Tax Relief
• Orchestra Tax Relief
• Museum and Galleries Exhibition Tax Relief

Companies can claim an additional deduction for the lower of 80% of total core expenditure or 100% of EEA core expenditure with a generous cash credit available of up to 25% of qualifying expenditure. As with all available tax reliefs there are certain criteria that must be met which our team can guide you through. It is definitely worth investigating if your company is within these industries as it is often overlooked or considered not feasible but can bring huge benefit to you.

Research and development tax reliefs are available to companies that are undertaking activities which seek to achieve an overall advance in science or technology and aim to resolve scientific or technological uncertainty. Many activities are considered eligible for R&D tax reliefs and maybe something that your business has never deemed feasible before, including improving or enhancing existing products or processes rather than starting from scratch.

There are many financial benefits arising from R&D tax reliefs:

• Small and Medium Sized enterprises “SMEs” * R&D tax relief provides an extra 130% deduction in addition to the normal 100% deduction, providing a total deduction of 230%
• The cash tax value of claims for tax paying companies is 25% of qualifying expenditure or £25 for every £100 of qualifying expenditure
• The cash benefit of claims for loss making companies is 33% of qualifying expenditure or £33.35 for every £100 of qualifying expenditure

89% of R&D tax relief claims in 2019-20 were made by SME’s (ref: HMRC) so it is definitely worth investigating your eligibility. There are now over 100 new R&D Inspectors at HMRC which illustrates the need to have robust supporting documentation in place to support your claim, which should also help to ensure timely processing by HMRC without query. Our team has over two decades of experience and can advise what is required to make a successful application.

*An SME is defined as a group/company with less than 500 employees, and annual turnover under 100m Euros, or Balance Sheet total of not more than 86m Euros.

Similar qualifying criteria applies to the R&D Expenditure Credit as for the R&D Tax Relief for SME’s, however the R&D Expenditure Credit provides a 13% credit on qualifying R&D expenditure. This credit is normally booked ‘above the line’ in operating profit as earnings (similar to a grant) and improves margins. The credit discharges tax liabilities or loss making companies can access a repayable credit at a net c.10%.

Eligible companies need to be undertaking activities that seek to achieve an overall advance in science or technology and which seek to resolve scientific or technological uncertainty. These developments could include integrating solutions from existing technologies or third party solutions which makes the product go beyond the standard use of off the shelf tools. Companies often set the barrier too high when assessing eligibility for R&D so it’s worth having a chat to explore if you are eligible.

Following the appointment of 100 new R&D Inspectors we are beginning to see a rise in enquiries into R&D claims, HMRC’s annual report for 2021 confirmed that there has been a 90% increase in R&D enquires. The government has also set out their intention to introduce a cross cutting team to tackle abuse of R&D claims, so we can expect the number of enquiries to continue to rise.

Dealing with HMRC enquiries can be time consuming on top of the day to day running of the business, we have over two decades of experience making R&D claims and can help you with the collation of relevant data, drafting responses, optimising the claim position as well as attending any HMRC meetings or calls.

If you have been contacted by HMRC about your R&D claim, whether you are an existing client or not, we can help you deal with the enquiry to bring it to a swift resolution. We will also work with you to ensure you have the right processes in place to capture the information needed to support submission of R&D claims going forward.

We can also support you in accessing grant funding for your R&D projects. We can help companies apply for grants through Innovate UK, the UK’s national innovation agency supporting businesses of all sizes in business-led innovation across all sectors, technologies and regions. Innovate UK run national grant funding competitions, some of these are specific themed challenge led programmes in order to support areas the government wants to specifically target support for, such as the Industrial Strategy Challenge Funding. Open competitions or the smart grant are also run up to four times a year which are open to any sector or organisation which typically provide funding of between £25k and £2m.

EU grant funding is also available via the current programme of Horizon Europe which has a budget of 95.5m Euros and will run to 2027. The UK government has announced they will associate to Horizon Europe enabling UK-based innovators to apply for funding for most opportunities on the same terms as EU-based applicants. Grants are offered through a mixture of open and competitive calls with funding available for individual SME research through to large multi nationals and for larger multiple stakeholder, cross-border collaborative projects. There are 5 main mission areas being:

1. Adaptation to climate change including societal transformation
2. Cancer
3. Climate-neutral and smart cities
4. Healthy oceans, seas, coastal and inland waters
5. Soil health and food

We can help you identify the most appropriate funding call, prepare or review the grant funding application, and help you understand the interaction this would have with your R&D claim if successful.