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7th November 2017

Expert Advice from Ayming: R&D Tax in Life Sciences

R&D Tax in Life Sciences
I speak to companies in many sectors and some are often surprised that their business activities can qualify for R&D tax relief, such as food development, scaffolding and toy manufacturing. However, if you are in the Life Sciences or Meditech sector and your accountant hasn’t already discussed R&D tax relief with you then you might need to consider a new advisor. This sector is the most obvious and primed to benefit from a government scheme that can either reduce a company’s corporation tax liability or provide a cash credit if loss making; up to 33.35p for every £1 spent on qualifying R&D activities.

What can I claim for?
All companies can claim tax relief on expenditure incurred seeking an advance in a field of science or technology through the resolution of a technological or scientific uncertainty. These can include:

  • Staffing costs including salaries, NICs, bonuses, car allowances, and pension contributions. However, you cannot claim for benefits in kind or dividends
  • Consumables and materials used making prototypes and initial manufacturing trials, as well as utilities and software
  • Third party contractors, including both those working under your company’s supervision and those brought in to perform specific tasks
  • Contributions to independent research, i.e. universities
  • Payments to clinical trial participants.

Activities that may be missed
When considering R&D, blue sky activities and projects pushing the boundaries, are obvious and always considered when making an R&D tax relief claim. These may include:

  • Improved analytical tools increasing sensitivity, range and accuracy
  • Assistive technology for wound care
  • Using pharmacogenomics to design drug therapies for specific genetic profiles
  • Development of medical imaging and diagnosis monitoring devices
  • Orthopaedic devices for detection of diseases.

But there are many activities which you may not think of as R&D, but still qualify for the relief?

  • Scaling up manufacturing and packaging trials for mass produced items
  • New technologies to support existing processes, increase efficiency and reduce costs
  • Assays or tests for the detection of genetic diseases
  • Managing large health data sets (Big Data)
  • Phase IV clinical trials – there can be some activities that are qualifying.

Whilst to some, the R&D tax regime can appear simple and straightforward but, without speaking to a specialist like myself, their claim may be missing less obvious eligible activities and costs. The scheme is a lot broader than a lot of people think.

For more information view Ayming’s profile or get in touch with Adam Spriggs.