New HMRC 2024/25 Patent Box data signals a boost for regional innovation

Patent Box is one of those tax reliefs that rarely makes the front page. While it lacks the headline-grabbing appeal of National Insurance changes or Budget giveaways though, HMRC's latest statistics suggest it remains one of the UK's most valuable incentives for innovative businesses. 

With claims reaching record levels and relief exceeding £2.2 billion for the first time, that is something businesses across South Yorkshire and Derbyshire should be paying attention to.

According to HMRC, an estimated 1,735 companies elected into the Patent Box regime in 2024/25, up from 1,695 a year earlier. More notably, the value of relief provided jumped from £1.86 billion to £2.28 billion. HMRC attributes the increase partly to the rise in the main Corporation Tax rate from 19% to 25%, which has widened the gap between the standard rate and the Patent Box's effective 10% rate, making the relief significantly more valuable.

At its heart, the Patent Box is designed to reward companies that develop, patent and commercialise intellectual property in the UK. The policy aims to encourage businesses to keep high-value research, development and manufacturing activities on British soil. 

That objective feels particularly relevant in our region.

While South Yorkshire and Derbyshire are often associated with manufacturing heritage, both areas have quietly developed thriving innovation ecosystems. From advanced manufacturing firms around the Advanced Manufacturing Research Centre (AMRC) in Sheffield to engineering, aerospace, medical technology and specialist manufacturing businesses across Derbyshire, the region contains exactly the kind of companies Patent Box was created to support.

Disparity between claims and business size

The latest data reinforces a trend that many advisers will recognise. Innovation in Britain remains heavily concentrated among a relatively small number of businesses. HMRC estimates that just 28% of Patent Box claimants were classified as "large" companies, yet those businesses accounted for 95% of all relief claimed.

That concentration becomes even more striking when looking at individual claims. The top 145 companies accounted for 92% of all Patent Box relief in 2024/25. 

Viewed through this lens, this presents both good news and bad news.

The good news is that Britain continues to generate globally competitive businesses with valuable intellectual property. The less encouraging observation is that many smaller innovative companies may still be leaving money on the table.

Unclaimed Patent Box relief across South Yorkshire and Derbyshire

For ambitious businesses across Chesterfield, Sheffield, Rotherham and Derby, the statistics serve as a reminder that patents are not simply legal protections. Increasingly, they are tax assets too.

The sector breakdown also tells an interesting story. Manufacturing businesses received 40% of all Patent Box relief in 2023/24, while companies in the Professional, Scientific and Technical sector accounted for a further 22%.

Neither statistic should surprise anyone familiar with the local economy.

South Yorkshire's advanced manufacturing cluster and Derbyshire's engineering and industrial base have spent the past decade moving steadily up the value chain. Competitive advantage is no longer derived purely from making products efficiently. It increasingly comes from designing something unique, protecting it through intellectual property, and commercialising that innovation successfully.

In that environment, the Patent Box acts as a useful bridge between technical innovation and financial reward.

Patent Box distribution across the UK

There is, however, a geographical caveat buried within the statistics. HMRC reports that companies based in London and the East of England received 64% of all Patent Box relief in 2024/25. Yet the department also notes that this analysis is based on registered tax addresses and may not accurately reflect where economic activity actually takes place. 

That distinction matters.

Many national groups maintain headquarters in London while operating research, development and manufacturing facilities elsewhere. It is entirely possible that a patented product designed in Sheffield or manufactured in Derbyshire ultimately appears in the statistics as a London claim.

The result is that regional innovation may be more evenly distributed than the headline figures initially suggest.

Intellectual property as a tax planning exercise

Perhaps the most encouraging takeaway from the report is the continued growth in participation. More companies are entering the regime, and eligible profits appear to be increasing. HMRC's figures show that Patent Box claims have followed a broadly upward trajectory since the regime was introduced in 2013.

For businesses across South Yorkshire and Derbyshire, the message is straightforward. If your company is developing proprietary technology, improving manufacturing processes or creating patentable products, intellectual property should not be viewed solely through a legal lens. It is increasingly a tax-planning consideration as well.

The UK's innovation economy may still be dominated by a relatively small group of heavyweight claimants. But beneath those headline numbers sits a growing opportunity for ambitious regional businesses prepared to turn innovation into protected intellectual property and, ultimately, profit.

As HMRC's latest figures demonstrate, the rewards for doing so have rarely been higher.

Check your Patent Box relief opportunities

If you think your business is missing out on Patent Box relief, it's not too late to take action. Our Radius team has years of experience assessing claims and helping businesses discover any opportunities they qualify for.