Our sector-specific Research and Development tax relief experts offer a broad range of expertise in many different fields of commerce and industry.
The pharmaceutical industry has become one of the UK’s fastest-growing market sectors over the past decade, with smaller and privately-owned companies leading the way in investments and collaboration. R&D tax credits can help recoup some of the outlay by increasing cash flow and offsetting tax liabilities.
Between 2018 and 2019, expenditure on research and development in the pharmaceutical industry increased from £4.5 billion to £4.8 billion, representing the largest R&D investment in any UK industry sector.
SME’s are driving innovation in this sector and play a major role in developing new medicines and technologies.
Unfortunately, many companies do not take the full advantage of R&D tax relief, either because they understate their claims, or don’t realise their eligibility.
R&D TAX CREDITS
Alongside the opportunities, there are also many challenges for a smaller company. Amongst the pharmaceutical ‘giants’ the average annual outlay on research and development is 17% of revenues, (for example, AstraZeneca spent 26.63% in 2018/19 and Biogen spent £15.41%) but smaller companies with lower revenue totals often spend up to 50% of their capital expenditure budget.
Smaller firms need sustainable investment over the long journey to develop a new drug, from preclinical research, through first trials, pilot studies, further trials and regulatory review and approval.
Most of these stages would involve resolving a scientific or technological uncertainty and would therefore have qualifying expenditure for R&D tax credits. The process can last anything up to ten years and will include many direct and indirect expenses, including materials and equipment used for the trials, salary costs employment overheads, and payments made to specialist subcontractors.
It may not be too late to recoup some of these expenses as R&D tax credit claims can still be submitted anytime up to two years from the end of your accounting period.