Pharmaceuticals R&D Tax and Grants

Pharmaceuticals Grants & R&D Tax: Unlocking Innovation in UK Life Sciences

The UK pharmaceutical sector is a global leader in drug discovery, clinical development, and advanced manufacturing. Yet, the path from molecule to market is long and capital intensive. That’s why pharmaceuticals grants and R&D tax relief play a crucial role in supporting innovation across the industry.

FI Group works with pharmaceutical companies at every stage — from early discovery to commercial scale-up — to access funding, reduce tax burdens, and accelerate R&D. With deep technical expertise and a track record in life sciences, we help you navigate the UK’s innovation incentives with confidence.

Qualifying Pharmaceutical R&D Activities

Whether you’re developing a novel small molecule, a complex biologic, or a new drug delivery method, your project may qualify for R&D incentives if it seeks to resolve scientific or technological uncertainty. Typical qualifying activities include:

Drug discovery and target validation
Formulation and pharmacokinetic optimisation
Process development and scale-up
Preclinical and clinical trials (particularly phases I and II)
Analytical testing and method development
Overcoming manufacturing or regulatory barriers

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R&D Tax Relief for Pharma Businesses

The UK’s R&D tax regime provides valuable relief for companies investing in qualifying research and development. There are two main schemes, depending on company size and funding status:

SME R&D Tax Relief

Smaller pharmaceutical firms (fewer than 500 employees) may claim under the SME scheme:

186% enhanced deduction for eligible R&D costs
Payable credit of up to 14.5% for loss-making, R&D-intensive SMEs

Note: receipt of grant funding may push an SME into the RDEC/Merged Scheme.

RDEC and Merged Scheme (Post-April 2024)

For larger pharmaceutical companies, or SMEs in receipt of notified grants, the R&D Expenditure Credit (RDEC) or new Merged Scheme applies:

A taxable credit (effectively cash benefit) calculated as a percentage of R&D costs
From April 2024, most businesses are subject to a unified scheme with streamlined rules

Qualifying costs include salaries, externally provided workers, consumables, software, and clinical trial expenditure.

Grant Funding Pharmaceutical Industry

Pharmaceutical innovators can also access significant non-dilutive grant funding to support early- and mid-stage R&D.

See All Grants

Key Grant Sources:

Innovate UK: Offers targeted funding for therapeutics, drug delivery and manufacturing
Biomedical Catalyst: Supports feasibility studies, translational R&D and early clinical trials
NIHR: Funds health research with strong patient benefit and NHS relevance
EIC Accelerator / Horizon Europe: For scale-ups and international consortia

Grants can provide up to 70–100% of eligible costs depending on the nature of the applicant and the technology readiness level (TRL).

Pharmaceutical Industry

Grants

Explore the latest innovation grants designed to support pharmaceutical companies in driving R&D and medical innovation.

Combining Grants and R&D Tax Relief

Pharmaceutical companies often make use of both R&D tax credits and grants. However, care must be taken to:

Understand how state aid grants affect SME tax relief eligibility
Allocate costs correctly between the grant budget and tax claim
Comply with HMRC’s rules around double funding

FI Group helps you structure funding strategically to maximise the overall financial benefit while staying compliant.

Examples of Eligible Pharma R&D Projects

Developing a novel oral formulation to improve bioavailability
Creating synthetic routes for complex active pharmaceutical ingredients (APIs)
Conducting phase I trials for a new therapeutic compound
Automating aseptic fill-finish production lines
Establishing new analytical methods for regulatory submission

Even if projects fail or result in negative data, they can still qualify if scientific uncertainty was addressed.

Why FI Group?

At FI Group, we understand the scientific and regulatory complexity of pharmaceutical R&D. Our services include:

In-house PhD experts in chemistry, biology, pharmacology, and data science
Extensive experience with R&D tax relief and pharmaceutical grants
Support with clinical trial costs, grant writing, and audit defence
Offices across England, Scotland, and 20+ international markets
Global best practices in innovation funding, tailored to UK compliance

Our meticulous, low-risk approach results in industry-leading claim quality and lower HMRC enquiry rates.

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