UNITED KINGDOM —The UK BioIndustry Association (BIA) has expressed its approval of a new and improved research and development (R&D) tax relief rate, which was revealed as part of the UK government’s Spring Budget.

The new policy aims to encourage innovation and investment in research and development across a range of industries, including biotechnology.

The enhanced R&D tax relief rate will provide companies with an increased deduction of 230% on qualifying R&D expenditure, up from the previous rate of 225%.

This means that for every £100 (US$ 122.7) spent on R&D, companies will be able to reduce their taxable income by an additional £130 (US$ 159.5), resulting in a tax saving of £24.70 (US$30.3).

Under this new scheme, companies that are investing more than 40% of their total operating costs in R&D but are not yet profitable will receive a cash payment of 27p for every £1 (US$1.2) invested.

This will enable life science entrepreneurs to attract private investment, grow their businesses, and accelerate innovation in the UK.

The government has also announced that the Research & Development Expenditure Credit (RDEC) will increase from 13% to 20% from 1 April 2023, as previously announced in the Autumn Statement.

The BioIndustry Association has hailed the new policy as a positive step towards promoting growth and development in the UK’s biotech sector.

Steve Bates, CEO of the BioIndustry Association, stated that “This is great news for our sector, and we thank the government for recognizing the importance of supporting innovation at this critical time.

The R&D tax relief scheme is an important tool for ensuring that UK companies can continue to develop innovative products and technologies that will benefit patients and society as a whole.”

The new policy is expected to be particularly beneficial for small and medium-sized enterprises (SMEs), which make up a significant portion of the UK’s biotech industry.

With the increased tax relief rate, SMEs will be better equipped to invest in R&D and bring innovative products and technologies to market.

In the financial year 2000-01, the UK government introduced R&D tax relief for small and medium-sized enterprises (SMEs) as a means of incentivizing eligible businesses to invest in research and development.

The purpose of the scheme is to reduce a company’s Corporation Tax (CT) liability, and in cases where the company is loss-making, they may receive a cash payment.

Since its introduction, the R&D tax relief scheme has been instrumental in promoting innovation and supporting the growth of SMEs in the UK.

The enhanced rate for R&D-intensive companies is the result of a successful campaign by the UK BioIndustry Association (BIA), which raised concerns about the negative impact of the Autumn Statement rate cut on the biotech and life sciences sectors.

Following two ministerial roundtables and collaboration with the Chancellor’s team, the BIA has helped inform policy development for the new R&D tax relief scheme.

To be eligible for R&D tax relief, companies must be engaged in projects that seek to make an advancement in science or technology.

This could include activities such as creating new products, processes or services, improving existing products, or resolving scientific or technological uncertainties.

MHRA receives budget boost and will fast-track approvals

Meanwhile, the Medicines and Healthcare products Regulatory Agency (MHRA) is set to receive an additional £10 million (US$12.3 million) in funding over the next two years, as announced in the Spring Budget.

The funding will enable the MHRA to accelerate patient access to treatments, in line with the interim recommendation of Sir Patrick Vallance’s review on pro-innovation regulation.

The UK government has also stated that the MHRA is exploring partnerships with trusted international agencies, including those in the U.S., Europe, and Japan.

These partnerships will aim to provide simple and rapid approvals for medicines and technologies that have received their approval from 2024.

Additionally, the MHRA plans to implement a fully operational swift approval process by 2024 for the most impactful new medicines and technologies, such as cancer vaccines and AI therapeutics for mental health.

While the additional budget is a welcome development, the MHRA still faces a significant challenge in establishing an international recognition framework while simultaneously developing a thorough yet shortened approval process.

To achieve this, the MHRA will require immediate freedom to recruit, train, and inspire world-leading regulatory scientists.

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