The Spring Budget 2023 included a number of positive announcements which are welcome for the life sciences sector. We summarise some of the key points which are most of interest to life science businesses below.
MHRA budget boost
The Spring Budget provides an extra £10m funding for the Medicines and Healthcare products Regulatory Agency (MHRA) over the next two years to accelerate patient access to treatments. The focus will be setting up a swift new regulatory approval process for cutting-edge medicines and devices for companies seeking rapid market access.
The government also announced that from 2024, the MHRA will move to a different model to allow what they described as rapid, and often near automatic sign-off for medicines and technologies already approved by trusted regulators in other parts of the world such as the US, Europe and Japan.
R&D tax credits
The most significant tax measure is the introduction of an enhanced credit for R&D-intensive loss-making small and medium-sized enterprises (SMEs) to mitigate the impact of the falling credit rates for expenditure from 1 April 2023.
SMEs that spend 40% or more of their total expenditure on R&D will be able to claim a credit worth £27 from HMRC for every £100 they spend on qualifying R&D. The government has stated that this support will affect 20,000 companies.
The Spring Budget also announced that the new rules restricting R&D relief claims for overseas activity will be delayed by a year. These restrictions will now come into force for accounting periods starting on or after 1 April 2024 subject to the outcome of the consultation on merging the SME and R&D Expenditure Credit schemes.
New capital allowances for investment
The government has introduced full expensing, a 100% first-year allowance, from 1 April 2023 until 31 March 2026. This means that companies across the UK will be able to write off the full cost of qualifying main rate plant and machinery, such as lab equipment, in the year of investment. Companies investing in special rate (including long life) assets will also benefit from a 50% first-year allowance during this period.
Share options and venture capital reliefs
Companies will no longer be required to set out details of share restrictions within the option agreement and the requirement for a company to declare an employee has signed a working time declaration will be removed with the government aiming to simplify to the process to grant Enterprise Management Incentive (EMI) options.
The government also increased the limits on the value of shares that can be placed under option per employee for Company Share Option Plan (CSOP) schemes and the amount companies can raise by Seed Enterprise Investment Scheme (SEIS) investment.
These announcements should bring optimism to the sector, although there are still many developments which are being watched keenly by the players in the UK life sciences industry, in particular whether the UK is able to re-join Horizon Europe.