Can an innovative business claim R&D tax reliefs and use Patent Box for the same advance?

Patenting an innovation can be an effective way of keeping control over Intellectual property (IP).

To do this, they may want to use Patent Box but could have some concerns about how this interacts with R&D tax relief claims.

For accountants to help these ambitious businesses, it is important to know when and how different schemes can be applied.

How does the Patent Box scheme interact with the R&D tax relief scheme?

Part of the confusion about whether the two schemes interact stems from the way that grant funding was traditionally handled by the R&D tax relief scheme.

Prior to the Merged Scheme being established, grant funding would render projects partly or wholly ineligible for inclusion.

This may have caused accountants and innovative businesses to become wary of accessing other sources of funding or support for fear of jeopardising the R&D tax relief claim.

The Merged Scheme no longer imposes such a barrier, so grant-funded projects can now qualify for inclusion in an R&D tax relief claim.

Fortunately, Patent Box is an entirely separate scheme that does not affect R&D tax relief claims and often follows a successful project.

Do patents matter at all for R&D tax relief claims?

For accountants and innovative businesses with an even longer memory, they might recall that patents were an essential part of an R&D tax relief claim prior to 2009.

Now, seeking to patent an advance serves to strengthen an R&D tax relief claim, but not getting a patent for an advance should not work against a claim.

There have been instances of patent decisions being raised during an enquiry process.

Innovative businesses should rest assured that this can be quickly dealt with through HMRC’s own guidance, severing the link between patents and innovation.

How can innovative businesses make the most of both schemes?

There should be a natural flow to the utilisation of R&D tax relief schemes and Patent Box.

An R&D tax relief claim is designed to reward the efforts put into making an advance possible, while Patent Box serves to reduce Corporation Tax once an innovation has been achieved and patented.

For accountants seeking to support innovation, knowing the right time to utilise both schemes can lead to more funds for future R&D work or other ventures.

With the Merged Scheme relaxing the rules, these two schemes can also now be used alongside other grants to create a network of investment.

As businesses find economic pressures more challenging, a greater understanding of financial options may be what keeps the lights on and advances being sought.

As R&D tax consultants, we can support you in strengthening the position of your clients through our expert understanding of R&D.

We can compile R&D tax relief claims and support Patent Box applications.

Our expert support can bring clarity to a potentially confusing subject, empowering your clients to move forward with confidence.

Get in touch to learn more about making the most of R&D tax reliefs and Patent Box.

Adam Bointon

Adam Bointon is a Technical Director specialising in R&D Tax Credits for SMEs in manufacturing and software sectors. With over 15 years’ experience, he works closely with businesses to identify qualifying R&D activities and prepare clear, compliant claims. He combines technical expertise with a strong understanding of economics and finance to support successful outcomes. Adam also contributes to industry webinars and CPD sessions, sharing insights on R&D tax relief and HMRC requirements.