The pharmaceutical industry is one of the most innovative industries globally, with over £200billion invested in pharmaceutical research and development in 2023 alone. Pharmaceutical R&D is vital to advancing medical science, tackling emerging diseases and improving manufacturing processes.
To encourage innovation and support pharmaceutical projects that push scientific and technological boundaries, the UK government has established a dedicated R&D tax credit scheme. Throughout this guide, we will explore:
- The benefits of R&D tax relief in the pharmaceutical & healthcare industry
- Who qualifies for pharmaceutical R&D tax relief
- How many R&D pharmaceutical tax credits your company can claim
- How Randd can simplify your R&D tax claim process
| Maximise your pharmaceutical R&D tax relief with RanddUK. With 15+ years of expertise, we secure up to 9 times more than standard accountants by identifying every eligible activity. Our proven track record and detailed reports ensure maximum returns, helping you reinvest in innovation. Partner with RanddUK for a rewarding, successful claim process! |
What is Research and Development in the Pharmaceutical Industry?
Research and development in the pharmaceutical industry refers to a wide range of innovative projects that advance modern medicine and scientific research practices. Many companies in the pharmaceutical sector qualify for this tax relief scheme but are unaware of their eligibility and the significant financial advantage it brings:
- Reduces R&D Costs – The average R&D cost to develop a new drug is £1.7billion. R&D pharmaceutical tax relief alleviates this expense by providing a notable tax reduction.
- Encourages Innovation – The pharmaceutical R&D incentive allows businesses to invest in cutting-edge drug development technology and medical equipment.
- Improves Cash Flow – R&D tax relief provides significant financial support, particularly for SMEs, to reinvest in future research.
- Supports Regulatory Compliance – Meeting stringent regulatory requirements can be expensive, but pharmaceutical R&D tax credits aim to ease this financial burden.
Types of R&D in the Pharmaceutical Industry
There are multiple areas where pharmaceutical R&D takes place, spanning drug discovery, development and medicinal optimisation. Below are some key categories of pharmaceutical R&D that may qualify for tax relief:
- Drug Discovery & Development – Conducting pre-clinical trials and optimising drug formulas.
- Biopharmaceutical Technologies – Researching antibodies, proteins and gene therapies.
- Digital Health & AI Advancement – Training artificial intelligence for drug discovery, clinical trial preparation and data analytics.
- Manufacturing Processes – Reducing the cost of pharmaceutical manufacturing and enhancing efficiency.
- Vaccine Research – Developing new vaccines and improving existing formulations for longevity.
- Medical Devices & Drug Delivery – Innovating new drug delivery systems, such as nano-technology based systems.
Who Qualifies for Pharmaceutical R&D Tax Relief?
To qualify for pharmaceutical R&D tax credits, a company must be:
- A UK-based company subject to Corporation Tax.
- Engaged in scientific or technological innovation within the pharmaceutical sector.
- Attempting to resolve technical uncertainties in drug development, medical devices or biopharmaceuticals.
- Developing new or improved pharmaceutical processes, products or technologies.
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How Much R&D Pharmaceutical Tax Relief Can Be Claimed?
To determine how much R&D pharmaceutical tax credits can be claimed, a company must evaluate its size and expenditure:
| Company Type | Criteria | R&D Tax Relief Available |
| SMEs (Small & Medium-Sized Enterprises) | Fewer than 500 employees & turnover under €100m. |
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| Large Companies | 500+ employees or turnover above €100m. |
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Qualifying Expenditure for Pharmaceutical R&D
Pharmaceutical R&D often involves a large investment in specialised personnel, laboratory materials, clinical trials and medical technology. Understanding which costs can be claimed ensures businesses receive the maximum financial benefit to reinvest in further innovation. Below are some key examples of qualifying expenditure for pharmaceutical R&D:
| Category | Eligible Costs |
| Staff Costs | Staff wages, pension contributions & National Insurance contributions. |
| Clinical Trials & Testing | Costs of volunteering recruitment, testing materials & laboratory analysis. |
| Subcontractor Costs/External Specialists | Payments to third parties assisting with R&D qualifying projects. |
| Materials & Consumables | Chemicals, lab equipment & raw materials for drug development. |
| Software & IT | Specialist software, AI tools & cloud computing costs. |
| Utilities | Power, water & fuel used in research activities. |
How to Submit A Pharmaceutical R&D Tax Credits Claim
Submitting a pharmaceutical R&D tax relief claim requires a thorough understanding of the latest HMRC guidelines to ensure compliance. A pharmaceutical company must follow these steps throughout the R&D claim process:
- Identify Qualifying Expenditure – Ensure medicinal R&D projects qualify as scientific or technological advancements.
- Calculate Eligible Costs – Include costs related to salaries, subcontractors, medical materials and clinical trials.
- Submit an Additional Information Form – For information and guidance surrounding the Additional Information Form, visit our previous guide on submitting an R&D AIF.
Submit the Claim via CT600 – You must submit your claim to HMRC through the company’s Corporation Tax return (CT600) within the accounting period.
Streamline Your R&D Pharmaceutical Tax Claim with Randd
Navigating the pharmaceutical R&D tax credit claim process can be challenging. With strict HMRC regulations to adhere to and potential pitfalls, ensuring the optimal outcome for your claim is difficult without specialist support.
At Randd, we specialise in helping pharmaceutical companies successfully claim R&D tax relief, ensuring they receive the full tax credits they deserve. Our expert team will assess your pharmaceutical projects to ensure eligibility, identify qualifying costs, prepare a comprehensive technical report and handle the entire submission process.
Partner with Randd and ensure your company secures the maximum R&D tax credits possible for pharmaceutical project relief. Contact us at 01332 409 711 or email [email protected] for expert guidance and a hassle-free claim process.
