The slow road to recovery for UK innovation with R&D tax reliefs

The position of UK R&D has been in question recently, as there has been a conflict between the Government’s desire to make the country a bastion of innovation and the actions of the businesses that would make it possible.

There have been many reasons behind this disconnect, not least due to the way that funding has been adjusted in recent times.

Information from the medical and pharmaceutical sectors is illuminating the state of research in the UK and could provide insights for other sectors.

Is the UK struggling with innovation?

Mentioning the pharmaceutical sector in relation to R&D in the UK has been a cause of concern over the past year, as many major businesses in the sector elected to move operations overseas.

However, the Association of the British Pharmaceutical Industry (ABPI) has been monitoring the situation and now feels that things may be improving.

In its UK pharmaceutical investment competitiveness report 2026, the ABPI has confirmed that “the UK is making progress to address the key competitive weaknesses that have deterred investment.”

While progress is slow and the UK is unlikely to be seen as an international pharmaceutical powerhouse, it does indicate that the vacuum left by the big companies leaving may not have been as significant as was feared.

This is either due to them maintaining some degree of operations in the country or the space being filled by smaller companies who were able to make the most of the opportunities left for them.

An ability to make the most of opportunities is also being reflected in the broader health sector wherein there is currently a call for more focus on malaria treatments.

It has been reported that the efforts to eradicate malaria are seeing promising results and that the UK’s contribution to this is valuable.

Consistently being the second-highest country funder of malaria R&D for nearly two decades, the UK has shown strong commitment to tackling malaria and UK institutions are involved in one in five malaria drugs, vaccines and vector control products currently in the R&D pipeline – the third highest in the world.

All of this indicates that the UK may not be struggling with innovation in the way that may have been feared.

How can the UK be more innovative?

There is always a question of doing more – if that question did not exist, then there would be very few advances in anything.

As such, it is worthwhile for accountants to reflect on how they can continue to help clients with R&D so that the UK can become an international leader in R&D.

The two examples noted in the pharmaceutical and health sectors should make it apparent that innovation works best when there is a concerted effort to achieve something that is of significant social value.

This viewpoint aligns with the changes to the UK Research and Innovation (UKRI) grant, wherein projects that demonstrate an alignment with Government goals or social needs will have priority access to funding.

Being able to communicate the value of research can be difficult, but fortunately there is a way to hone that skill.

R&D tax relief claims rely on convincing those outside the field why something is a genuine advance that serves more than just a single business, as this is the metric by which a claim gets approved by HMRC.

As R&D tax consultants, we are experts at framing valid projects in a way that makes it clear why they are truly innovative and why explaining how the R&D took place.

When we work to complete an R&D tax relief claim, we can share insights on how to present information and highlight the value of work being done.

This can empower innovative businesses to not only make full use of R&D tax reliefs but also frame their work in terms of its broader societal impact.

For accountants who are looking to help their clients get the support they need to keep growing, this ability to highlight the value of R&D is truly vital.

With the pharmaceutical sector showing positive signs of recovery and the health sector continuing to embark on bold new projects, it is time to understand how other businesses are working to create true innovation.

Help your clients do more with their innovative work by speaking to our team today.

Adam Bointon

Adam Bointon is a Technical Director specialising in R&D Tax Credits for SMEs in manufacturing and software sectors. With over 15 years’ experience, he works closely with businesses to identify qualifying R&D activities and prepare clear, compliant claims. He combines technical expertise with a strong understanding of economics and finance to support successful outcomes. Adam also contributes to industry webinars and CPD sessions, sharing insights on R&D tax relief and HMRC requirements.