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.