Home Biotech UK May Cut R&D SME Tax Credit Damaging UK Biotech Sector

UK May Cut R&D SME Tax Credit Damaging UK Biotech Sector

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Anna Smith for PharmaTimes reports that the UK BioIndustry Association (BIA) has announced that changes to small and medium enterprises (SME) research and development (R&D) tax credit schemes could harm a thriving sector.

Apparently, the UK government proposes to introduce a cap on the value of cash payments loss-making SMEs can receive through the R&D tax credits scheme, which are a valuable source of finance for young companies trying to get from one venture capital fundraise to the next.  The government is looking at potentially capping at three-times the PAYE and National Insurance Contributions (NIC) liabilities of a company.

Although well intended to prevent fraud , the unintended consequences for life science R&D companies, with between 50%-60% of genuine SMEs potentially affected, including start-ups and clinical trials ventures.

The net result:  UK life science biotechs will not have the capital or option to change their outsourcing business model and hence will need to either scale back their R&D or worse may not be viable moving forward.  Steve Bates, CEO of the BIA reports “While the Government’s consultation was done with the best of intentions, if these proposals are introduced, it could put a hard brake on the UK’s rapidly expanding biotech start -up  and scale-up community and effect other tech sectors in similar ways.”

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