Can I Claim Trademarks and Patents as a Business Expense?
Application fees are deductible. The trademark itself may be a capital asset depending on value and circumstances.
What HMRC Says
IP protection costs like trademark applications are generally allowable. Significant IP purchases may be capital and subject to amortisation rules.
When You Can Claim
- Trademark application fees
- Patent filing costs
- IP protection legal fees
- Trademark renewals
When You Cannot Claim
- Large IP purchases (capital treatment)
- Personal trademark applications
Understanding Trademarks and Patents Expenses
Trademarks and patents are an area where the tax treatment depends on whether you are creating and registering your own intellectual property or purchasing it from someone else. For most small company directors, the focus is on registering their own brand name or logo as a trademark, and the costs involved are generally deductible.
When your company applies to register a trademark with the UK Intellectual Property Office (UKIPO), the application fees are deductible revenue expenses. A single-class UK trademark application costs £170 online, with additional classes at £50 each. If you engage a trademark attorney to handle the application, search for conflicts, and manage the process, their professional fees are also deductible. The total cost for a straightforward UK trademark registration, including professional fees, is typically £400-£800.
Renewal fees are similarly deductible. UK trademarks must be renewed every ten years, and the renewal fee is treated as a revenue expense in the year it falls due. This applies to both UKIPO renewals and international trademark renewals under the Madrid Protocol.
Patent costs are more complex. The patent application itself, including UKIPO filing fees and patent attorney fees for drafting and prosecuting the application, is generally treated as revenue expenditure and is deductible. However, if the patent represents a significant intangible asset, HMRC may argue it should be capitalised and amortised over its useful life. For small companies with modest patent costs, the practical approach is to expense the costs, but discuss this with your accountant if you are spending substantial amounts on patent prosecution.
The key boundary is between registering your own IP (generally revenue and deductible) and purchasing IP from a third party (capital and not immediately deductible). If you buy an existing trademark or patent from another business, the purchase price is a capital asset. It goes on your balance sheet and is either amortised over its useful life or written down under the intangible fixed asset rules. The annual amortisation charge is deductible, but you do not get an immediate deduction for the full purchase price.
Real-World Examples
Registering a company brand name as a trademark
A tech startup registers its brand name as a UK trademark in two classes (Class 9 for software and Class 42 for SaaS services). The UKIPO fee is £220 and the trademark attorney charges £350 plus VAT. The total deductible cost is £570 plus £70 VAT, which the company reclaims.
Filing a patent for a new invention
An engineering company files a UK patent application for a new product design. Patent attorney fees for drafting and filing total £4,500 plus VAT, and the UKIPO fee is £310. The £4,810 total (plus reclaimable VAT) is expensed as a professional fee. If the patent is subsequently granted, no further capitalisation is required for the application costs already deducted.
Renewing existing trademarks
A company renews three UK trademarks at £200 each, totalling £600. These are deductible revenue expenses in the year the renewals fall due. The company's trademark attorney charges an additional £150 per renewal for handling the process.
Purchasing a trademark from another business
A company buys an established brand name from a competitor for £25,000. This is a capital purchase of an intangible asset, not a revenue expense. The £25,000 goes on the balance sheet and is amortised over the trademark's remaining useful life. The annual amortisation charge is deductible.
Common Mistakes to Avoid
- Treating the purchase of an existing trademark or patent from a third party as a revenue expense. Buying IP is a capital transaction and must be capitalised on the balance sheet and amortised.
- Not claiming trademark application and renewal fees because they seem like one-off costs. These are legitimate business expenses that reduce your tax bill and should always be claimed.
- Filing trademark applications in the director's personal name rather than the company name. If the company is paying, the trademark should be owned by the company. Personal trademarks paid for by the company create complications.
- Forgetting to claim the associated professional fees. Many directors remember the UKIPO filing fee but forget to claim the trademark attorney's fees, which are often the larger cost.
Frequently Asked Questions
How much does a UK trademark cost through my company?
A UK trademark application costs £170 for one class via the UKIPO online service, plus £50 for each additional class. If you use a trademark attorney, expect to pay £250-£500 in professional fees on top. The total cost of £400-£700 is fully deductible as a business expense.
Are trademark renewal fees tax deductible?
Yes. Trademark renewals, which are due every ten years in the UK, are deductible revenue expenses. The UKIPO renewal fee is £200 per class. Any attorney fees for handling the renewal are also deductible. Claim these in the year the renewal falls due.
Can I claim the cost of an international trademark?
Yes. International trademark registrations through the Madrid Protocol or direct filings in other countries are deductible business expenses. The costs are higher, typically £1,000-£3,000 depending on the number of countries and classes, but the tax treatment is the same.
Is a design registration deductible?
Yes. Registered design applications with the UKIPO, costing from £50, are deductible business expenses. Like trademarks, the registration protects your company's intellectual property and the cost is a legitimate business deduction.
Should I capitalise or expense my patent costs?
For most small companies, patent application and prosecution costs are expensed as revenue expenditure. This is the simpler approach and HMRC generally accepts it for internally developed patents. If the costs are very substantial or you are building a valuable patent portfolio, discuss capitalisation with your accountant.
Source: HMRC Business Income Manual BIM35800 - Intellectual property costs; HMRC Corporate Intangibles Research and Development Manual CIRD10000 - Intangible fixed assets
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