Innovation in the aerospace sector requires strategic funding and support, and there are several avenues available to help companies maximise the value of their innovations. From managing Intellectual Property (IP) through patents, trademarks, copyrights and creating a valuable tax asset, to exploring grant funding opportunities and R&D tax relief schemes, these options can provide significant financial advantages while encouraging further technological development.

In this article, we will focus specifically on how aerospace companies can benefit from the Patent Box regime — a powerful incentive for companies developing patented technologies, offering a reduced tax rate on profits derived from these innovations.

Patent Box Tax Relief for Aerospace companies

If you have a patent you could be eligible to claim through Patent Box. The UK government is keen to encourage creation of world-leading IP through R&D support and other targeted mechanisms such as Patent Box.

The benefits of claiming Patent Box

The Patent Box scheme is very generous. It allows eligible companies to apply a reduced rate of corporate tax (10% as opposed to the current 25%) to profits derived from the sale of products or services containing a qualifying patented innovation or IP – resulting in increased cash flow and improved financial performance. This encourages innovation and investment in R&D, as companies can enjoy significant tax advantages when commercialising their patented inventions.

The Patent Box also promotes the protection of intellectual property rights, as it incentivises companies to actively pursue patents and safeguard their valuable innovations. Overall, the Patent Box is a powerful tool for aerospace companies to maximise the value of their intellectual property, drive competitiveness, and stimulate further technological advancements within the industry.

Are you eligible for Patent Box?

• • Are you a UK-based company that pays UK Corporation Tax?

• • Do you hold qualifying intellectual property rights, such as granted patents or exclusive licenses for patented inventions? These patents must be granted by the UK Intellectual Property Office, the European Patent Office, or certain other specified countries.

• • Have you undertaken qualifying development activities related to the patented inventions? This includes activities like conducting research, designing, and developing the patented technology or its applications.

• • Are you actively involved in exploiting the patented technology by actively licensing it, selling products incorporating the patented technology, or using the patented technology to generate income?

If you meet these criteria, you can register for the scheme and then calculate a “patent box profit” annually for each patent you are commercialising.

What ABGi can do for you

We will assist in compiling and assessing associated costs and tracked profits from relevant patent protected products, and advise on:

• • The implications of existing R&D eligible expenditure on calculation of relevant IP income;

• • Managing corporation tax benefits of the combination of both R&D tax relief and Patent Box schemes;

• • On-going legislative changes & impact on current or future patent box claims.

• • We will prepare the Patent Box report and associated calculation for inclusion in your tax return.

We can support your company throughout the entire lifecycle of an Innovation project, from IP Management and Grant Funding, to R&D Tax Relief and Patent Box.

If you have any questions or wish to further discuss how it might benefit your own business, please get in touch with ABGi. A representative will get back to you to discuss your unique needs and explain how we can assist.