Innovation taking place across the construction industry means businesses in the sector could gain significantly from the UK government’s ‘patent box’ scheme. Data from an Innovation Nation survey found that 92% of companies in engineering and building felt they were between somewhat innovative and highly innovative. However, HMRC data shows that few are capitalising on their innovation through patenting.
In the 2018-19 period, there were 3,125 claims made for R&D tax credits, proving companies in the sector are taking the first steps towards capitalising on their innovation. Yet, there have been just 30 patent box claims from construction firms in the same timeframe, so far.
Comparing the construction sector to other industries in the UK, it’s clear that construction companies are somewhat behind the curve. The manufacturing sector has the most patent box claims of any sector: the construction industry has less than 5% of its claims.
The construction sector has barely scratched the surface of its potential when it comes to making the most of patent box, Innovation Nation claims. The figures show not only a relatively small number of claims, but high financial returns for those businesses which successfully completed the process. An average patent box claim so far in 2018-19 is worth £806,504.
It’s not just for large companies – 76% of companies claiming patent box tax relief are SMEs. It opens a potential source of untapped funding for UK SMEs and could hold the key to government claims of ‘building back better’ after Covid-19. A successful patent box application can reduce an SME’s corporation tax on profits by 44%, on average. The average SME patent box claim for 2018-19 stands at £106,667 so far.