Dr Joanna Thurston, partner and patent attorney at Withers & Rogers, explains why now is the time for life sciences companies to innovate. 

Driving economic growth has become a core focus for the Government, benefitting the UK’s most innovative businesses. In the recent Autumn Budget, it was announced that spending on R&D activity would increase by £22bn, with the R&D tax relief scheme also being extended. As a result, now is the perfect time for life sciences and other companies to innovate. 

The new £1.4bn Global Britain Investment Fund will help to attract investment from overseas into dynamic growth sectors such as life sciences and electric vehicle technologies. Alongside this, more funding for Innovate UK, which supports the development of early-stage businesses, should also encourage more companies to invest in the development of new technologies. 

However, for those that wish to make the most of the funding and tax incentives available, patent protection is key. In April 2023, corporation tax is set to rise, and with many industries still recovering from the impacts of Brexit and the pandemic, maximising the tax reliefs available will help businesses to survive and thrive at this challenging time.  

Businesses that file patent applications may be eligible for the Government’s Patent Box scheme, as well as R&D tax relief. Launched by HMRC in 2013, Patent Box cuts corporation tax from 19% to 10% on profits from the sale of patented technologies. The lower rate of 10% will still apply after the corporation tax increase, making it even more worthwhile for innovative companies. It’s also important to note that patents can be granted for incremental advances in technology, not only major leaps forward. 

Failing to take full advantage of tax reliefs such as Patent Box and R&D tax credits could lead to businesses missing out on considerable financial savings. The number of claims is increasing, but not every sector is represented equally. For example, manufacturing makes up a quarter of R&D tax relief claims, whereas construction and transportation have hardly made a dent. 

Patent Box statistics also show an increase in the number of companies claiming relief, but again it is the manufacturing sector that comes out on top, making up over half of the claims. Although some sectors are not inherently ‘innovative’, this shouldn’t dissuade them from looking into the schemes, as they may be surprised at what they can claim for. If the relief continues to only be claimed by certain industries, the Government may need to consider a new approach to promoting its Patent Box scheme. 

To optimise profits and secure their growth path, life sciences businesses should reassess their R&D activity and consider how best to use the funding and tax reliefs available.  

Dr Joanna Thurston is a partner and patent attorney at intellectual property firm, Withers & Rogers LLP