Guest blog by Estelle Roger, Precision for Medicine
Research & Development (R&D) Tax Credits are available to pharma and biotechs to incentivize drug development and clinical research in countries around the world
In this article, we will discuss the United Kingdom’s R&D tax credit program, which is part of its post-Brexit strategy to boost innovation in drug development within its borders. First, a bit of information about Precision for Medicine. We are more than just a Contract Research Organization and have a comprehensive suite of capabilities to support the spectrum of biopharmaceutical companies’ needs across the drug development lifecycle. We will share later on in this article what services we can provide locally in the United Kingdom, which will help Sponsors (Biotech and Pharma) take advantage of the UK R&D tax credit program.
Disclaimer: PFM prepared this article for informational purposes only and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. Please consult your own tax, legal, and accounting advisors before engaging in any UK tax credit applications.
Insights into the UK R&D Tax Credit Program
Now, let’s dive back into the information we have to share. UK biotechnology companies are considered a critical hub of innovative drug development, and the UK’s R&D tax relief program is particularly beneficial to drug development innovation conducted in the country. Indeed, R&D expenses can be claimed on activities performed throughout the drug development process. The United Kingdom government has a very helpful website that explains how the process works. We will cite a few areas below, and a link to their website is here.
The UK technically offers two R&D tax relief pathways:
- R&D relief for small or medium-sized enterprises (SMEs)
- R&D Expenditure Credit (RDEC)
We will focus on the former, the R&D program available for small or medium-sized enterprises, defined by UK government as follows:
- Less than 500 staff
- Turnover of <€100 million or a balance sheet total <€86 million
Where the above conditions are met, and per tax authority guidance, the following relief is available:
- Have the potential to deduct an extra 130% of their qualifying costs from their yearly profit, as well as the normal 100% deduction, to make a total 230% deduction
- Claim a tax credit if the company is loss-making, worth up to 14.5% of the surrenderable loss
If you are an SME, as defined by the UK government, and want to claim your R&D tax credits, we encourage you to learn more about this on their website.
As per mid-November 2022, HMRC official announcement, please note that for expenditures on or after 1st April 2023, the SME scheme rate is likely to decrease from 130% to 86%. Furthermore, R&D cash claims will also be reduced from 14.5% to 10%.
“As a leading UK CRO, Precision for Medicine is exceptionally positioned to support our emerging UK BioPharma companies, allowing them to benefit from advantageous local R&D incentives”
— Andrea Cotton-Berry, Global Head, Strategic Development US, EU, APAC
UK Based Services available from Precision for Medicine
Providing customized CRO solutions from late pre-clinical stage all the way through post-launch clinical trials, Precision for Medicine offers a unique partnership to promote innovation in the United Kingdom, prioritizing R&D activity development locally and maintaining close collaboration with UK R&D centers of excellence. Below is a list of available services based out of the UK.
| UK-based Laboratory Services | UK-based Clinical Trial Research Services |
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Please note, R&D tax credit programs are available in European Union and North American countries where Precision for Medicine also operates laboratory and clinical trial services.
Collaborate with a UK-based Partner
For small and emerging companies where you want to tap into UK R&D tax credits, it’s also critical to work with a partner with services and staff in the UK. This is where PFM can support your drug development innovation. To learn how Precision can support your efforts, contact our team here.
About the author
Estelle Roger is a senior program manager at Precision Medicine Group and supports strategies related to public funding of research and innovation. With more than 5 years building and managing R&D Tax incentives strategies for both CROs and pharmaceutical industries, Estelle’s expertise covers a meaningful panel of R&D tax relief regimes from the NA to EU landscape.
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