Building Long-Term Value Through IP Strategy

R&D tax relief is a familiar tool for many aerospace and defence businesses, a practical way to recover some of the cost of innovation and reinvest in future projects.

But that’s only part of the picture. With a bit of planning, innovation can do more than recover past expenditure,  it can become a long-term tax asset that strengthens your financial position and attracts future investment.

1 | Why look beyond R&D tax relief?

R&D tax relief remains one of the most valuable incentives available to UK innovators, but it focuses on the cost of development. The Patent Box complements it by rewarding the commercial success that follows, allowing companies to apply a reduced 10 % Corporation Tax rate to profits from patented inventions.

Despite being in place for over a decade, Patent Box is still under-used. In the most recent figures published by HMRC, more than 65,000 companies claimed R&D tax relief, yet only around 1,600 benefited from Patent Box — and most of those were large organisations. For SMEs across the Aerospace, Defence, Security and Space sectors, this represents a missed opportunity.

2 | The case for a joined-up IP strategy

A coordinated approach to R&D, IP protection, and tax planning can deliver lasting financial advantages.

By viewing innovation through a wider strategic lens, companies can:

→    Recover historic R&D investment through tax relief

→    Reduce future tax on profits via Patent Box

→    Strengthen their investment case and valuation

→    Build resilience and long-term financial value

Even businesses without existing patents can benefit. Early IP planning helps identify patentable elements within ongoing projects and ensures future eligibility for relief once patents are granted.

3 | How Intellectual Property becomes a financial asset

Intellectual property is more than legal protection, it’s a measurable business asset that can directly affect profitability.

A well-structured IP strategy can:

✓  Support grant and funding applications
✓  Increase attractiveness to investors and acquirers
✓  Improve cash-flow management by combining multiple tax incentives
✓  Encourage knowledge retention and UK-based innovation

By integrating IP considerations early in project planning, companies can ensure their innovations are not only technically successful but financially optimised.

4 | Next steps

If your business is developing new technologies or already holds patents, it’s worth reviewing how an IP-led funding strategy could enhance your innovation plans.

ABGi UK, a long-standing ADS Group member, has supported companies across aerospace, defence, security, and space for over 17 years, helping them access funding, protect their IP, and identify untapped tax value in their work.

If you have any questions about how best to align your intellectual property activities with your broader commercial objectives, please contact the ABGI Team. A representative will get back to you to discuss your unique needs and explain how we can assist.