R&D tax relief rate: ValiRx's thoughts

In the Spring Budget, the Chancellor announced an enhanced R&D tax relief rate for ‘R&D intensive SMEs.’ Dr Suzy Dilly, CEO of Nuneaton-headquartered life sciences company ValiRx, comments on the news:

“As a growing life sciences SME headquartered in Nuneaton, we’re really pleased that the government has announced an enhanced research and development (R&D) tax relief rate for SMEs. The higher tax relief rate will enable us to continue to progress our research into new therapeutic options for cancer and diseases associated with women’s health and continue to create skilled jobs in the Midlands region. Today’s announcement will help to accelerate innovation within UK life sciences sector, particularly in the Midlands, which has a strong track record for scientific research and development.”

Spring Budget key messages: R&D tax relief rate

• The Chancellor is targeting government investment at companies that are at the cutting edge of science and developing new innovative products like medicines that will benefit society whilst creating jobs in a key growth area for the UK economy
• SMEs that are investing over 40% of their total operating costs in R&D and not yet making a profit will receive a cash payment of 27p for each £1 they have invested in R&D under the new relief rate.
• R&D expenditure is defined as expenditure eligible for R&D tax relief under the current SME R&D tax relief regime
• The higher rate will be available for claims covering expenditure after 1 April 2023
• All other loss-making SMEs will receive a new lower relief rate of approximately 18p, which was announced at the Chancellor’s Autumn Statement in November 2022.

Life science sector statistics

• Government figures show there are over 6,548 businesses in the UK life sciences industry, and approximately 70-80% are SMEs. These businesses employ over 282,000 people and generated £94.2 billion of turnover in 2021.
• The number of businesses and the number of sites operated by these businesses have both seen an upward trend since 2009, with 23% more businesses and 32% more sites operating across the UK in 2021 compared to 2009.
• Medical innovation is driven by smaller companies, which represent 65% of the global drug development pipeline with an additional 7% being developed by them in partnership with larger firms.
• The UK accounts for 35% of all life science start-ups created in Europe since 2012.

Set up by the BioIndustry Association, the Treasury Connect: Life Sciences conference saw ValiRx CEO Dr Suzy Dilly be invited to participate in the Access to Finance discussion group. Read the news piece here.