31ST JULY, 2019

Claiming R&D tax credits in the healthcare sector

UK companies within the healthcare sector are likely to spend a lot of their time and money on Research and Development (R&D). Whether it be developing new pharmaceutical products, improving current ones or building cutting-edge complimentary technology, the broad scope and variety of R&D in this sector is likely to be far more complex than in any other industry.

The healthcare sector itself is an apparently positive and fulfilling one. Businesses are often working for the greater good, be it through the launch of the latest wonder drug to cure a particularly nasty disease or pioneering a brand new piece of awesome technology. It’s this industry that can really change peoples’ lives on an impressive scale.

With this in mind, it’s hardly surprising that the amount of expenditure on R&D in the healthcare sector is pretty substantial. Around 48% of the £16.5 billion invested in UK Research and Development throughout 2016 was spent in the healthcare industry alone.

Most of the healthcare budget is spent on clinical development and preclinical research. Under the current legislation, much of the work done to make improvements and advancements is likely to be eligible for tax relief under the government’s R&D tax credit scheme, making it an important issue for companies to be aware of.

Examples of qualifying expenditure

Although this is by no means an exhaustive list, below are some common areas where R&D could take place in the healthcare industry:

Laboratories and developing/testing medication

A good example of Research and Development within healthcare is in developing processes with the aim of purifying chemical compounds to be used in respiratory illnesses. Whilst this might be a very obvious and logical form of R&D, as with all claims for R&D tax relief, a successful claim is not dependent upon the company offering a successful solution to a problem. Rather, simply the act of advancing science and technology and taking steps towards a final goal is enough to qualify.

NHS Monitoring

Various types of NHS bodies, such as Mental Health Trusts and Primary Care Trusts, have an essential requirement to engage with their staff and users for the purpose of obtaining performance-related feedback. This is often done using staff, patient and user surveys. The development, administration and management of these surveys has led to R&D being undertaken in creating software algorithms especially for this purpose.

Specialist seat manufacture

When it comes to care homes for example, many providers require increasingly complex seating arrangements for the clients they look after. Seats need to be durable, hardwearing and also very easy to use for care home staff. For example, an arm chair that also has wheels on it to double as a wheel chair may need an extendable foot rest for use by multiple people at different times. R&D could be undertaken to create this footrest, which can then be operated effectively and easily using just one hand for example.

Orthopaedic instruments

As you may have guessed, the parts and kits used in, for example, knee and hip replacement surgeries require very technically complex, specialised and intricately precise medical components. R&D tax relief could help with the costs involved in building the prototypes for such equipment as well as in developing a process that will help to scale it up to full production.

Developing new material compounds

Very similar to the development of orthopaedic instruments we’ve discussed above, this looks at the underlying materials compounds as opposed to the instruments themselves. R&D often takes place where a company is looking to develop either a brand new product, or where further work must be done on an existing product so that it can be brought to market.

What else can R&D tax credits cover?

As mentioned, the examples above are just a few of the claims likely to come from clients within the healthcare sector and it isn’t a comprehensive list. There are a large number of other examples in this industry and across many others. However, if your company is working to develop new or improved pharmaceutical products or other technology either on existing goods or to advance the industry itself, then this work will likely be eligible for tax relief under the government’s Tax Credits scheme. Don’t forget though that generally the success or failure of your Research and Development is not the most important bit when it comes to a claim - it’s the simple fact that you’re undertaking it that matters. This means your company should not be penalised if it is unable to achieve the results it was hoping for.

R&D tax credits can also be claimed on the costs involved in employing staff who are actively or directly involved in the research and development work itself, as well as to help with the costs of materials used. In certain cases, payments made to subcontractors that have also worked on the R&D project in question can be included too.

The tax credits scheme essentially allows businesses to claim some of their corporation tax back. This is dependent on how much has been spent on research and development, and how much of those costs meet the scheme’s eligibility criteria. 

How much will my company be able to claim back through R&D tax credits?

Your company can claim back up to 33% of qualifying expenditure. If your business has made a loss, it can still claim up to 14.5% as a cash refund.

The procedure in making a claim for R&D tax credits is not always straightforward and it’s well worth using a specialist R&D tax firm that really knows what they’re doing, as each claim will be looked at closely by Her Majesty’s Revenue and Customs (HMRC). This is what makes it so important that you fully understand exactly what types of things you can claim for and what is not allowed as well.

To help you gain a more specific idea of how much you can claim through R&D tax credits, Tax Cloud has created an accurate, easy to use tax calculator for businesses. Simply enter a few details and you may be surprised what your company could be entitled to.

The calculator is powered by Myriad Associates, our parent company who are experts in all aspects of R&D tax relief and would be pleased to answer any questions you may have. Call us today on 0207 118 6045 or use our contact page.

Barrie Dowsett, ACMA, GCMA
Author Barrie Dowsett, ACMA, GCMA CEO, Tax Cloud
Latest posts
13TH AUGUST, 2019 How can companies find extra money to help prepare for a No Deal Brexit?
6TH AUGUST, 2019 Quick Guide to R&D Tax Reliefs in Engineering
31ST JULY, 2019 Claiming R&D tax credits in the healthcare sector
26TH JULY, 2019 How can businesses make R&D investment a priority?
18TH JULY, 2019 How will Brexit affect R&D tax credits?
12TH JULY, 2019 Tax Cloud launches in Ireland
5TH JULY, 2019 How to claim a critical tax boost for your SME
5TH JULY, 2019 R&D Tax Credits made simple and affordable
28TH JUNE, 2019 Why are SME’s missing out on R&D tax relief
14TH JUNE, 2019 Is my SME eligible for R&D Tax Credits?
3RD JUNE, 2019 Why Use an R&D Portal Over an R&D Advisor?
24TH MAY, 2019 How SMEs Can Benefit from R&D Tax Credits
14TH MAY, 2019 Charities Benefit Following Tax Cloud's Successful Show at Accountex
25TH APRIL, 2019 Tax Cloud's Most Innovative Companies 2019
12TH APRIL, 2019 Accidental Innovation - Tax Cloud's Top 8
5TH APRIL, 2019 A Practical Guide to R&D Tax Relief at Accountex 2019
27TH MARCH, 2019 What Software Projects Qualify for R&D Tax Credits?
15TH MARCH, 2019 3 Automotive Innovations To Look Out For In 2019
1ST MARCH, 2019 What is Research and Development in Business?
22ND FEBRUARY, 2019 Growth hack: Tap Into R&D tax credits
15TH FEBRUARY, 2019 Beyond R&D Tax Credits - public funding for your innovative start-up
1ST FEBRUARY, 2019 5 Steps To Deliver An Optimised R&D Tax Credit Claim
25TH JANUARY, 2019 Top Tax Cloud FAQs
16TH JANUARY, 2019 What Projects Qualify for R&D Tax Credits in The Medical Industry?
11TH JANUARY, 2019 Accounting practices are generating fee rates of £325/hr
2ND JANUARY, 2019 R&D Tax Credits - It's Not As Difficult As You Think
14TH DECEMBER, 2018 4 Ways To Determine If You Qualify For R&D Tax Credits
26TH NOVEMBER, 2018 What Projects Could Be Eligible For R&D Tax Relief in Manufacturing?
2ND NOVEMBER, 2018 How To Know If Your Business Is Entitled To R&D Tax Credits
25TH OCTOBER, 2018 Why Isn’t The Agricultural Industry Claiming R&D Tax Credits?
10TH OCTOBER, 2018 Is Your Business Eligible For R&D Tax Relief?
3RD OCTOBER, 2018 The Most Common Mistakes People Make With R&D Tax Credits
18TH SEPTEMBER, 2018 #1 R&D Tax Claim Portal ‘Tax Cloud’ launches Xero Integration
14TH SEPTEMBER, 2018 What To Look For In An Online R&D Tax Credits Claim Portal
7TH SEPTEMBER, 2018 5 Ways To Grow Your Accountancy Practice
31ST AUGUST, 2018 Common Pitfalls To Avoid While Claiming R&D Tax Credits
24TH AUGUST, 2018 How Far Back Can I Claim R&D Tax Credits?
17TH AUGUST, 2018 Should I Use a Specialist or My Accountant For My R&D Tax Credits Claim?
27TH JULY, 2018 3 Things To Consider When Making An R&D Tax Credits Claim
13TH JULY, 2018 R&D Tax Credits – Don’t Fall Through The HMRC Trapdoor
25TH JUNE, 2018 Tax Cloud Shortlisted for Innovation of the Year
8TH MAY, 2018 Visit us at Accountex 2018, London eXcel
30TH APRIL, 2018 Benefits of A Self-Service R&D Tax Credit Portal
13TH MARCH, 2018 R&D Tax Credits Platform Tax Cloud Celebrates 100 SME’s Seeking Expert Support
5TH FEBRUARY, 2018 How R&D Tax Credits Can Help Your Startup Grow
29TH JANUARY, 2018 Getting the Best Returns From Your R&D Tax Credits Claim
22ND JANUARY, 2018 Introducing: The Tax Cloud Partner Programme
18TH JANUARY, 2018 What Costs Can You Claim Through R&D Tax Credits?
9TH JANUARY, 2018 Common Misconceptions About R&D Tax Credit Claims
13TH DECEMBER, 2017 Tax Cloud at FinTech Connect Live 2017
5TH DECEMBER, 2017 R&D Tax Credits Made Simple For Small Businesses
4TH DECEMBER, 2017 Innovate UK Launches £50m Innovation Loan Pilot Scheme
3RD DECEMBER, 2017 Video Games Tax Relief Scheme Extended
20TH NOVEMBER, 2017 The 3 Things You Need To Consider When Making An R&D Tax Credits Claim
Popular Tags
Start your Tax Cloud claim now Discover if you qualify and ensure your R&D tax claim is maximised. Get started
Powered by Myriad Logo

Myriad Associates helps businesses maximise tax reliefs and secure R&D grant funds. We specialise in R&D Tax Credits, Video Games Tax Relief, Innovate UK grants, Horizons 2020 grants, and Research and Development Capital Allowance Claims.

  • Submitting R&D tax claims since 2001
  • 100% success rate
  • Over £100m claimed and counting
  • Industry leading specialists
  • In-house technical, costing and tax experts
  • Member of the Research and Development Consultative (RDCC) committee

Meet some of the team behind Tax Cloud

Barrie Dowsett Barrie Dowsett ACMA CGMA Chief Executive Officer
David Farbey David Farbey MA, FISTC, FRSA Technical Consultancy Director
Deborah Chapple Deborah Chapple ATT Corporate Tax Director
Lauren Olson Lauren Olson MA, MISTC Senior Technical Consultant