--- title: Patent Box for SMEs – Reduce Corporation Tax description: The UK Patent Box scheme is a tax incentive program that can reduce the corporation tax paid on profits derived from patented inventions image: https://blog.shorts.uk.com/hubfs/patent-box.jpg --- [![Shorts_logo_White](https://blog.shorts.uk.com/hubfs/New%20Site%202018/Shorts_logo_White.svg "Shorts_logo_White")](https://www.shorts.uk.com/) [Blogs & News](https://blog.shorts.uk.com/) > [RADIUS - R&D Tax Relief & Patent Box](https://blog.shorts.uk.com/topic/radius-rd-tax-relief-patent-box) # Patent Box for SMEs – Reduce Corporation Tax Darryl Hoy - 27 February 2023 ###### Select topic - Please Select - [ Audit ](https://blog.shorts.uk.com/topic/audit) [ Business Taxes ](https://blog.shorts.uk.com/topic/business-taxes) [ Radius – R&D Tax Relief & Patent Box ](https://blog.shorts.uk.com/topic/radius-rd-tax-relief-patent-box) [ Corporate Finance ](https://blog.shorts.uk.com/topic/corporate-finance) [ GENUS Management Accounts ](https://blog.shorts.uk.com/topic/genus-management-accounts) [ VAT ](https://blog.shorts.uk.com/topic/vat) [ Private Client ](https://blog.shorts.uk.com/topic/private-client) [ Payroll ](https://blog.shorts.uk.com/topic/payroll) [ EOT ](https://blog.shorts.uk.com/topic/eot) [ International Taxes ](https://blog.shorts.uk.com/topic/international-taxes) ![featured image](https://blog.shorts.uk.com/hubfs/patent-box.jpg) [The UK Patent Box scheme](https://www.shorts.uk.com/rd-tax-reliefs/patentbox/) is a tax incentive program that aims to encourage and reward innovation by reducing the corporation tax companies have to pay on profits derived from patented inventions. ## Is Patent Box available to SMEs? Yes, the Patent Box scheme is available to all qualifying UK companies, including SMEs (Small and Medium-sized Enterprises). It allows eligible companies to apply a lower corporation tax rate (10%) to profits deriving from patented products and processes. This tax rate is significantly lower than the standard UK corporation tax rate ([currently at 19% but set to change to 25% in April 2023](https://www.gov.uk/government/publications/rates-and-allowances-corporation-tax/rates-and-allowances-corporation-tax)), resulting in significant tax savings. It is important to note that the definition of SME for R&D tax purposes is slightly different than for normal EU reporting. [You can learn more about those differences in our blog](https://blog.shorts.uk.com/what-is-an-sme-for-rd-purposes). ## How do SMEs qualify for Patent Box? To qualify for the Patent Box scheme, an SME must: - hold a qualifying patent, which can be either a UK or European patent - own or exclusively license the qualifying IP - carry out qualifying development work on the patented invention - carry out the work in the UK or the European Economic Area (EEA) - incur expenditure on the work. The qualifying project can include creating, or significantly improving, a product, process or service that is covered by the patent. Further conditions will also need to be considered and should be explored in detail with a Patent Box specialist. Once an SME qualifies for the Patent Box Scheme, it can elect to apply the reduced Corporation Tax rate of 10% to profits earned from the patented invention. This applies to worldwide income from sales or licensing of the patented product, process, or service. ## Why doesn’t every SME claim Patent Box? Despite being a generous incentive to encourage SMEs to develop and commercialise new products and technologies, many companies do not realise they qualify. There are a few reasons why an SME may not explore this opportunity, including: - **Lack of awareness:** Many SMEs may not be aware of the Patent Box scheme and how it can benefit their business. They may not be actively seeking information about the scheme or exploring whether or not they are eligible. - **The scheme can be complex:** The process of making a Patent Box claim can be time-consuming as the calculation is detailed and complex. Not all accountants or tax advisors have the expertise needed which is why using a qualified Patent Box tax specialist can help make it easier to understand and claim. ## Learn more about Patent Box with our free guide The Radius team at Shorts has produced a free Patent Box guide, which provides all the essential information an SME needs to know. This includes qualifying criteria, how it works, and how to get started with a claim. Alternatively, if you would like to speak to a qualified Patent Box expert, please get in touch with our team. ## Other R&D Tax Relief opportunities for SMEs SMEs can further benefit from their innovative activities through the R&D Tax Credit scheme, specifically the SME scheme. The SME scheme is a generous incentive designed to encourage companies to invest in R&D. Eligible SMEs can claim a higher rate of tax relief on their R&D expenditure than larger companies. From April 2023 this scheme will be worth around 21.5% of qualifying expenditure. Qualifying companies can [combine R&D Tax Credits with Patent Box](https://blog.shorts.uk.com/combining-rd-tax-credits-with-patent-box) for excellent tax savings. - [**Learn more: SME Scheme for R&D Tax Reliefs**](https://www.shorts.uk.com/radius/randd-tax-relief/sme-scheme/) -     ** ** ![author](https://blog.shorts.uk.com/hubfs/darryl.png) #### Darryl Hoy Darryl is the Technical Director of the Radius team. He is a specialist in Research & Development tax reliefs, having previously worked at HMRC as an R&D Tax Inspector. [View my articles](https://blog.shorts.uk.com/author/darryl-hoy) Tags: [RADIUS - R&D Tax Relief & Patent Box](https://blog.shorts.uk.com/topic/radius-rd-tax-relief-patent-box) Share this on - - - [Questions? Get in touch with us](https://www.shorts.uk.com/contact/) ###### Tax Saving Guide 2026-27 Written especially for entrepreneurs and owner-managed businesses, this guide is full of planning ideas and tax risks to avoid. [ Download now ](https://info.shorts.uk.com/en-gb/tax-saving-guide) ![Tax saving guide 2026-27](https://blog.shorts.uk.com/hs-fs/hubfs/Tax%20saving%20guide%202024.jpg?width=375&height=465&name=Tax%20saving%20guide%202024.jpg) ###### Related articles ##### [What is the Patent Box - How does it work?](https://blog.shorts.uk.com/hmrc-patent-box-scheme) ##### [Patent Income – Defining profits from IP for Patent Box](https://blog.shorts.uk.com/patent-income-defining-profits-from-ip-for-patent-box) ##### [Combine R&D Tax Credits with Patent Box](https://blog.shorts.uk.com/combining-rd-tax-credits-with-patent-box) ##### [10 Years of Patent Box: A Brief History of the Scheme](https://blog.shorts.uk.com/radius/10-years-of-patent-box-history) ###### Latest articles [A case of aggressive tax avoidance: Glasgow Rangers Football Club](https://blog.shorts.uk.com/aggressive-tax-avoidance-affect-you) [What is VAT? - Complete Guide (Updated for 2025/26)](https://blog.shorts.uk.com/what-is-vat) [Ashgate Hospice Sparkle Night Walk 2026](https://blog.shorts.uk.com/ashgate-hospice-sparkle-night-walk-2026) [Stocktaking guide for UK businesses](https://blog.shorts.uk.com/stocktaking-guide-for-uk-businesses) [Supporting the Chatsworth Cascade for future generations](https://blog.shorts.uk.com/supporting-the-chatsworth-cascade-for-future-generations) [Deal of the Year win at Insider Dealmakers Awards 2026](https://blog.shorts.uk.com/deal-of-the-year-win-at-insider-dealmakers-awards-2026) [Football shirt Wednesday: Backing England in style](https://blog.shorts.uk.com/football-shirt-wednesday-backing-england-in-style) [Understanding lifetime trusts: the basics](https://blog.shorts.uk.com/understanding-lifetime-trusts-the-basics) [Close company directors face new HMRC detail requirements in 2026](https://blog.shorts.uk.com/close-company-directors-face-new-hmrc-detail-requirements-in-2026) [Shorts advise Harris Irwin Architects on successful growth funding.](https://blog.shorts.uk.com/shorts-advise-harris-irwin-architects-on-successful-growth-funding) #### About Us Use this little footer to reinforce your message about who you are and why people love working with you. 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