Ahead of the UK’s Spring Budget, the UK BioIndustry Association (BIA) is calling on the Treasury to provide additional support through the R&D tax relief scheme to R&D intensive SMEs.
These companies are the most at risk from the R&D tax relief rate cut announced at the Autumn Statement, due to their high R&D investment and lack of other revenue sources.
At Autumn Statement 2022, the UK Chancellor cut the SME R&D tax relief rate, meaning SMEs will only receive half the cash co-investment from Government they are expecting from April 2023 onwards, creating deficits in their future budgets.
With the difficult private fundraising environment, many pre-revenue biotechs are unable to weather these cuts, with many having to cancel investment plans, reduce headcount and even risk going bankrupt.
BIA and the wider life sciences sector, as well as other sectors, raised concerns about this impact, and BIA led a sector letter to the Chancellor signed by over 300 CEOs of member companies.
Before Christmas, the Chancellor responded to BIA to say that he recognises the challenges the SME rate cut creates for life science companies and he sees “merit” in the case for providing further support.
BIA has continued to meet with ministers and officials since Christmas to discuss what further support could be provided to R&D intensive businesses in light of the cut, which will take effect from April 2023.
Steve Bates OBE, CEO of BIA, said: “R&D intensive start-ups and scale-ups are the lifeblood of an innovation-led economy, which the Chancellor has rightly said he wants to create. In life sciences these innovative companies are creating the medicines and technologies that will change and improve our lives in years to come, and laying the foundations for the industries of the future.”
