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Executive Summary
The Patent Box is a UK tax relief which allows companies to pay a corporation tax rate of 10% on profits related to the exploitation of patented inventions and products, rather than the usual 25% rate. Introduced in 2013, the Patent Box was intended to incentivise firms to invest in, develop and commercialise new technology, and to attract associated high value jobs to the UK.[1]
Though foregone tax revenue was originally expected to be around £900m a year when the Patent Box was introduced,[2] its projected cost to the UK exchequer has nearly doubled since 2020 and is now forecasted to have risen to £2.4bn in 2024/5.[3]
A TaxWatch investigation has found that:
- Over half (56%) of this £2bn+ annual tax break – intended to stimulate innovation across the UK economy – goes to just ten companies, and over two-fifths (41%) benefits just five companies, according to unpublished HMRC figures released via Freedom of Information to TaxWatch and the online publishing platform Critical Takes on Corporate Power.[4]
- TaxWatch’s analysis of hundreds of company accounts filed at the UK’s company registry shows that 27 percent of all Patent Box relief accorded across the UK economy since its introduction in 2013 – and in some years close to 40 percent — has gone to a single multinational: GlaxoSmithKline Plc (GSK Plc), the highly profitable pharmaceutical company which was one of the leading advocates for introducing the Patent Box in the early 2010s.
- Since 2013, GSK Plc has received £3.4bn in tax relief from the Patent Box. This includes £486m tax relief in 2024 alone.[5] Though GSK’s name has long been attached to the Patent Box as a major cheerleader when it was being developed, the scale and concentration of the benefit that this single firm derives from the UK tax break have not previously been known.
- In 2024 alone, the UK tax revenue foregone from GSK Plc’s Patent Box relief – just for one corporate group – was larger than the entire annual budget of the Biotechnology & Biological Sciences Research Council, the UK government’s main bio-science innovation funder that year.[6] Patent Box relief received by GSK represents an annual subsidy of over £50,000 for each of the group’s full-time-equivalent UK jobs.[7]
- Though the Patent Box is intended to promote knowledge development, manufacturing and jobs within the UK, patents owned by GSK subsidiaries which appear to have attracted Patent Box relief include patents for products that were developed by companies in the USA and Switzerland, and are manufactured outside the UK in a range of European and North American countries.[8]
- One patent that GSK has confirmed has specifically received UK Patent Box tax relief[9] is for a drug for the auto-immune disease lupus which is manufactured in Italy and the USA;[10] and marketed from Ireland.[11] GSK transferred the ownership of this drug’s intellectual property (IP) to the UK when it acquired the drug’s US co-developer in 2012. However, GSK initially offered the drug to the UK’s National Health Service (NHS) in 2012 at such a high price that it was not available to NHS patients until May 2016, after GSK lowered the price after GSK lowered the price.[12]
There is no suggestion of any wrongdoing on the part of any of the companies mentioned in this report, or that they are attempting to avoid or evade the effects of UK tax law. They are taking lawful advantage of a highly permissive tax relief which due to its design predominantly benefits large, profitable companies. Contrary to its stated aims, it appears that this relief does not require the innovations qualifying for a major reduction in UK tax to be exploited and marketed in the UK; the resulting products manufactured in the UK; or all of the related research and development to be conducted in the UK. Unlike some other recipients, GSK Plc declares its benefits from innovation reliefs in the accounts of its UK subsidiaries.
The UK Patent Box was introduced in 2013 against opposition from some other countries which included it amongst internationally “harmful tax practices”,[13] and argued that it provided “too much leeway for large multinationals to minimise their taxes”.[14] Much of the UK manufacturing sector also opposed the Patent Box: their representatives warned it would be “a costly and inefficient subsidy for a narrow set of companies” which would benefit a “handful of large pharmaceutical and aerospace companies…without any significant economic rationale”.[15] TaxWatch’s investigation confirms this prediction.
HMRC’s most recent customer survey, moreover, indicates that for the majority of firms now qualifying for the Patent Box, the availability of the tax relief had not stimulated any new innovation, but simply applied to these firms’ existing intellectual property (IP), and “had not impacted their overall business or investment decisions.”[16]
In a period of intense pressures on the public purse, reconsidering the costs and benefits of the Patent Box is long overdue.
If the UK is to retain its Patent Box tax regime, then in order to achieve its stated aim of promoting high-value jobs in developing and commercialising innovative technologies and products in the UK, the regime should require qualifying products to be developed, commercialised and manufactured in the UK.
TaxWatch shared detailed findings of this report with GSK Plc along with a series of questions about the companies, patents and tax relief detailed below. GSK responded to several of these questions, as well as providing their detailed views on the Patent Box. TaxWatch is grateful for GSK’s engagement, and has integrated their responses into this report. GSK’s full response is in Annex I.
TaxWatch also asked the other corporate groups mentioned in this report to comment on our findings, along with questions about the amounts of their Patent Box relief. Astrazeneca Plc declined to comment. Unilever Plc did not respond to our request for comment.
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[1] HMRC, ‘CIRD200110 – Patent Box: overview of the patent box regime: aim of the patent box’, Corporate Intangibles Research and Development Manual (11 March 2016, updated 1 August 2025).
[2] HM Treasury, Budget 2012, Table 2.2, p. 53.
[3] HMRC, Non-structural tax reliefs (December 2024) ; HMRC, Patent Box relief statistics: September 2025.
[4] Figures obtained by TaxWatch from HMRC via Freedom of Information request, 7 August 2025; Figures obtained by Critical Takes on Corporate Power from HMRC via Freedom of Information requests, 12 March 2025 and 2 June 2025, shared with TaxWatch.
[5] TaxWatch calculations from financial accounts of GlaxoSmithKline Intellectual Property Ltd, GlaxoSmithKline Intellectual Property Management Ltd, ViiV Healthcare UK Ltd, ViiV Healthcare (No 3) UK Ltd, Phivco UK Ltd, Phivco UK II Ltd, 2013-22. Patent Box relief statistics from HMRC, Patent Box Relief Statistics: September 2025.
[6] Department for Business, Energy and Industrial Strategy, BEIS research and development (R&D): UK Research and Innovation allocation 2022-2023 to 2024-2025 (30 May 2022).
[7] TaxWatch calculation from UK FTE employment figure provided by GlaxoSmithKline Plc spokesperson in email communication to TaxWatch, 4 September 2025.
[8] According to the 2013 financial accounts of GSK IP Ltd (Note 7, p. 11), the IP transferred to it from Singapore and US subsidiary include the IP rights for Xyzal (levocetirizine), a drug originally developed by UCB Farchim, a Swiss subsidiary of the Belgian pharmaceutical company UCB Farchim (Bachert et al, ‘Levocetirizine improves quality of life and reduces costs in long-term management of persistent allergic rhinitis’, Journal of Allergy and Clinical Immunology, Vol. 114, No .4, pp. 838-844, Oct 2004); albiglutide, a drug originally developed by the Maryland, USA pharmaceutical company Human Genome Sciences Inc, then owned by GSK (Gilroy et al, ‘Controlled release of biologics for the treatment of type 2 diabetes’, Journal of Controlled Release Volume 240, pp. 151-164, Oct 2016); and darapladib, also developed by Human Genome Sciences Inc in conjunction with GSK (‘Spotlight on Glaxo heart drug as others fail’, Reuters, 9 August 2007.)
[9] GlaxoSmithKline Plc email communication to TaxWatch, 5 September 2025.
[10] Package leaflet, information for user (Benlysta), March 2025 ; European Medicines Agency, Summary of Product Characteristics [Benlysta], p. 135.
[11] Package leaflet, information for user (Benlysta), March 2025 ; European Medicines Agency, Summary of Product Characteristics [Benlysta], p. 135.
[12] Selina McKee, ‘UK patients to be barred from first new lupus drug in 50 years’, Pharma Times, 1 May 2012.
[13] G20 leaders communiqué, 15-16 November 2014.
[14] ‘Germany calls on EU to ban “patent box” tax breaks’, Reuters, 9 July 2013 ; HM Treasury, ‘Germany and UK agree joint proposal for rules on preferential IP regimes’, 11 November 2014.
[15] EEF (The Manufacturer’s Organisation, now Make UK), Written Evidence to the Commons Business, Innovation and Skills Committee (9 December 2010).
[16] HMRC, The Large Business Survey 2024: Full Report (17 July 2025).