Patent Box Statistics 2026: Why Relief Passed £2 Billion

HMRC published its annual Patent Box relief statistics on 24 September 2026. The headline figures show 1,735 companies elected into the regime in the financial year 2024-25, receiving relief worth £2,283 million. That is an increase of 40 companies and £426 million on the previous year.

It is the first time the value of Patent Box relief has passed £2 billion, and a rise of 23% in a single year. The 2024-25 figures are a projection based on returns filed to July 2025, and HMRC will revise them in the next release in Autumn 2027.

The more useful question is why the figure rose. HMRC attributes the increase to two things: the continuing effect of the Corporation Tax main rate moving from 19% to 25% on 1 April 2023, and an increase in projected eligible profits. On HMRC's own reading the second of those largely reflects a recovery from unusually low eligible profits in 2023-24 "rather than a step change in underlying profitability". The figures below bear that out.

Who this applies to

This is relevant to UK companies that hold, or are considering applying for, patents granted by the UK Intellectual Property Office, the European Patent Office or a qualifying EEA territory, and that earn profits attributable to those rights.

It is particularly relevant to companies in manufacturing and engineering, which make up around 60% of those electing in, and to any company that has recently carried out development work and is deciding whether to protect the output. Qualification is assessed company by company and right by right. Holding a patent does not by itself produce relevant IP profits.

What the September 2026 statistics show

The main figures for the financial year 2024-25, with the prior year in brackets, are:

• 1,735 companies elected into the Patent Box (1,695)
• £2,283 million of relief (£1,857 million)
• £15,223 million of profits eligible for relief (£13,761 million)
• Large companies received 95% of the relief from 28% of the companies electing in (93% from 29%)
• 145 companies received relief of more than £1 million each, accounting for 92% of the total
• 185 companies, around 11% of those elected in, received no relief at all

Take-up has grown slowly for most of the regime's life. The number of companies electing in rose from 1,575 in 2018-19 to 1,645 in 2022-23, an increase of 70 companies over four years. The last two years have added 50 and then 40. That is a modest improvement on a low base rather than a step change.

Why the relief has risen faster than take-up

The Patent Box works by applying an effective 10% rate of Corporation Tax to relevant IP profits. Under section 357A of the Corporation Tax Act 2010, the benefit is delivered as an additional deduction, and the tax saved on each £1 of relevant IP profit is the gap between the rate the company would otherwise pay and 10%.

That gap widened when the main rate rose from 19% to 25% on 1 April 2023. It moved from 9 pence in the pound to 15 pence. HMRC's own table shows the effect almost exactly.

Financial year	Companies	Relief (£m)	Eligible profits (£m)	Relief as % of eligible profits	Main CT rate
2021-22	1,635	1,317	14,632	9.0%	19%
2022-23	1,645	1,428	15,872	9.0%	19%
2023-24	1,695	1,857	13,761	13.5%	25% from 1 April 2023
2024-25 (projection)	1,735	2,283	15,223	15.0%	25%

In 2021-22 and 2022-23 the relief came to exactly 9.0% of eligible profits, which is the 19% rate less the 10% Patent Box rate. In 2024-25 it comes to exactly 15.0%, which is the 25% rate less 10%. The 13.5% in 2023-24 sits between the two because many companies had accounting periods straddling 1 April 2023 and were only partly exposed to the higher rate. 2024-25 is the first full year at 25%.

Splitting the £426 million increase

Because the relief is so closely tied to the rate differential, the year-on-year increase can be separated into the two drivers HMRC identifies. Eligible profits rose by £1,462 million, or 10.6%. The effective differential rose from 13.5% to 15.0%. Taken together, roughly half of the £426 million increase is attributable to the wider rate differential and roughly half to the recovery in eligible profits.

Over a slightly longer horizon the picture is more one-sided. Compared with 2022-23, relief is up 60%, from £1,428 million to £2,283 million, while eligible profits are down 4%, from £15,872 million to £15,223 million. The pool of qualifying profit has not yet returned to its 2022-23 level. The relief attached to it is worth two thirds more per £1.

So the £2 billion milestone is better read as a rate effect than as evidence of a step change in Patent Box activity, provided the 2024-25 recovery in eligible profits is acknowledged alongside it.

Where the relief goes

By company size

Large companies accounted for 480 of the 1,735 electing in and £2,159 million of the £2,283 million of relief. Medium-sized companies received £80 million, small companies £36 million and micro companies £8 million. Put another way, the 1,230 medium, small and micro companies in the regime shared around 5% of the relief between them.

By concentration

145 companies received more than £1 million of relief each, totalling £2,105 million, or 92% of the whole. At the other end, 185 companies received nothing and a further 90 received under £2,000.

By sector and region

Manufacturing accounts for 1,045 companies, 60% of the total, but £819 million of relief, 36% of the total. London and the East of England together account for 21% of companies and 64% of the relief. Northern Ireland has 70 companies and £29 million. HMRC notes that the sector and regional splits reflect where a company is registered and classified, not necessarily where its development work takes place.

What the figures do not tell us

Two cautions are worth stating plainly, because the statistics are often read as saying more than they do.

First, the statistics say nothing about how many companies could qualify but have not elected in. HMRC does not hold that figure and it cannot be inferred from the published tables. Claims about the scale of unclaimed Patent Box relief are estimates, not data.

Second, the 185 companies that received no relief are not necessarily companies that missed out. An election stays in place until it is revoked, so a company can be elected in during a year in which it makes no relevant IP profits, or makes a loss, or has no Corporation Tax liability to reduce. A nil figure is an ordinary feature of the regime, not evidence of an error.

Worked example: what the rate change is worth

Assume a company with relevant IP profits of £300,000 for an accounting period ending 31 March 2025. Assume it pays Corporation Tax at the main rate of 25%, is not within marginal relief, and that the nexus fraction has already been applied in arriving at the relevant IP profits figure.

• Without a Patent Box election: £300,000 at 25% gives Corporation Tax of £75,000
• The Patent Box deduction is £300,000 multiplied by (25% less 10%) divided by 25%, which is £180,000
• Taxable IP profit becomes £300,000 less £180,000, which is £120,000
• £120,000 at 25% gives Corporation Tax of £30,000
• The saving is £45,000, which is 15% of the relevant IP profits

The same £300,000 of relevant IP profits in an accounting period ended 31 March 2023, when the main rate was 19%, would have produced a saving of £27,000. Nothing about the company's patents, products or profits has changed. The relief is worth £18,000 more because the rate it displaces is higher.

A company charged at the standard small profits rate of 19% is in a different position. For those companies the applicable rate in the statutory formula is 19%, so the saving is 9 pence in the pound rather than 15. Companies within marginal relief need the calculation worked through on their own figures rather than assumed.

The rules that have not changed

The statistics report on the regime. They do not change it. Three operational points remain as they were.

• The election deadline. An election must be made within two years after the end of the accounting period in which the relevant profits and income arose. Miss it for a period and the benefit for that period is gone.
• Revoking an election. A company that revokes its election under section 357GA CTA 2010 cannot make a new election with effect for any accounting period beginning within five years of the end of the period specified in the revocation notice.
• The nexus fraction. For accounting periods beginning on or after 1 July 2021, relief is restricted where the company acquired the patent or paid connected parties to carry out the underlying research and development. Streaming and record keeping by IP right or product are required.

Lexmore's View

The headline number is encouraging, but a good part of it is arithmetic. Relief crossed £2 billion in a year when the main rate of Corporation Tax was fully in effect at 25% for the first time, and when eligible profits were recovering from an unusually weak 2023-24. On HMRC's own figures the pool of eligible profit has still not returned to its 2022-23 level.

What has changed is that the relief is now worth two thirds more per £1 of qualifying profit than it was three years ago. That shifts the calculation for companies that previously looked at the record-keeping requirements and decided the benefit did not justify the work. It is worth revisiting that conclusion on current numbers.

One of the most easily overlooked constraints is timing. A patent application filed today takes time to grant, and the two-year election window runs from the end of the accounting period, not from the date a company gets round to looking at it. The decisions that determine whether Patent Box is available are taken at the point a company decides what to protect, and when. By the time the tax return is being prepared, the options have largely been set.

For SMEs, the starting point is not the size of the patent portfolio. It is whether the company owns or exclusively licenses qualifying IP, has undertaken the relevant development activity, and is generating profits from products or processes connected with that IP. Businesses already undertaking research and development should consider Patent Box alongside their wider IP strategy rather than treating it solely as a year-end Corporation Tax exercise.

We would also caution against reading the sector split as a qualification test. Manufacturing accounts for 60% of companies in the regime, but a great deal of manufacturing work involves no patented invention at all, and plenty of patented products generate no relevant IP profits. The test is applied to the company's own rights and income streams, and that is where the work sits. Our Patent Box service page sets out how we approach that assessment, and our guides on how UK SMEs pay 10% on patent profits and how the Patent Box reduces Corporation Tax cover the mechanics in more detail.

References

• HMRC, Patent Box relief statistics: September 2026
• HMRC, Patent Box reliefs statistics (collection and data tables)
• GOV.UK, Use the Patent Box to reduce your Corporation Tax on profits
• Corporation Tax Act 2010, section 357A
• Corporation Tax Act 2010, section 357GA