At the heart of most projects in the pharmaceutical industry lies R&D. Yet, there is a false preconception that activities worthy of R&D tax relief are only done by drug development companies, even though there are many less obvious examples, such as suppliers of equipment, drug modification and specialist testing companies. As a sector that requires a substantial amount of investment at the beginning stages of the project, claiming pharmaceutical R&D tax relief could help alleviate some of financial stress. Despite this, around 90% of eligible companies do not claim, partly thinking that they are not eligible, and the others struggling to understand how to correctly identify and attribute R&D activities for HMRC.
Only around 10% of qualifying companies claim pharmaceutical R&D tax relief. Are you the 90% not claiming?
Between 2007 to 2016, the global pharmaceutical industry invested over $1.36 trillian in R&D, and the forecasts predict that by 2022 annual investment in R&D activity will be $181 billion. Imagine the amount of tax relief you can be getting back?
There are a variety of activities that potentially qualify for pharmaceutical R&D tax relief, such as drug discovery, specialist equipment, manufacturing of drugs and their adaptations, testing, delivery and packaging, to name a few. All throughout the life cycle of a drug, from development to commercialisation, there may be potential for a variety of companies to claim back some financial relief for their innovative contribution to the pharmaceutical sector.
What is R&D tax credit?
The UK Government’s Research and Development Tax Relief scheme is a way to encourage and reward companies that are investing in innovation.
What qualifies as innovation?
For tax purposes, R&D takes place when you are creating something that will advance the overall knowledge or capability in the field of science and technology. In simple terms, if you are solving industry problems, creating new software, process or materials or anything that could be considered Intellectual Property, you qualify.
Most fintech projects involve some aspect of innovative R&D activity and how you deal with it may potentially save you money, instead of costing you money. Although in most other sectors it is possible to show a tangible piece of equipment as the output of your R&D activity, most fintech require a different approach when it comes to filing for an R&D tax credit claim.
New software, innovative ways of storage, advances in AI and calculation engines, innovative CRMs and more, can all count towards an R&D tax credit claim no matter whether they have been successful or not.
- R&D of raw materials for drug production, methods of analysis and development of research software.
- Building expenditure, such as installing new or modernising existing facilities to ensure a certain quality of product.
- Have you developed a more sustainable way of managing your wastage?
- Are you doing innovative research to solve a problem that will advance science?
- Are you thinking outside the box by tackling sustainability issues, such as using recyclable materials, reducing waste from contamination or the amount of materials you use?
- Are you working on discovering new compounds that can be used for a medication?
- Are you developing new materials and compounds?
- Phases 1,2, and 3 of clinical trials
- Test batch production and production processes for evaluation.
- Are you a specialist drug testing company that creates bespoke tests or clinical trials to analyse the effectiveness of a new drug?
- Are you a supplier of specialist medical equipment?
- Do you create variations of existing drugs where the method of delivery is adapted, such as making medication child friendly by turning it into a gummy form?
- Do you adapt existing drugs for the wider market, such as vegetarian and vegan substitutes.
- Are you developing new types of packaging, such as eco friendly packaging or specialist child-resistant packaging?
- Are you adapting the size and taste of a drug?
Want to find out whether you can claim 33% of your R&D costs back?
There is a reason it's called innovation.
Think your project qualifies but we did not mention it above? Most likely! That’s why it’s called innovation. Get in touch with us and let us see whether you qualify for an R&D tax credit.
r&d tax credit for sMEs with novel
Making Sure Your Business Gets the Funding it Deserves
At Novel, we balance between the attention to detail and number crunching of an accountant, with our child-like disposition to anything new, unusual and innovative. To embody this philosophy we even named our company Novel.
We are on a quest to spread awareness about the R&D tax scheme so SMEs all over the UK can get funding to pursue their research. We know that to some businesses finding out about the R&D tax credit scheme was the difference between going bankrupt and continuing their work and starting to make money. To others it was more psychological, it acted as the earliest sense of recognition for their work. If you are an SME and think that you may qualify for an R&D tax credit, we want to hear from you!