Our Community Supporters Claim Capital discuss the R&D Tax Credits scheme, how it works, and how it enables MedTech SMEs to scale-up, faster.
As Health Foundry members, you’ll know that the UK is home to a thriving healthcare industry. In fact, you’ll likely be contributing to its success!
Our nation’s influence on global healthcare is driven by the MedTech we produce, which partners medical intervention with tech advancements to help people live healthier, happier lives.
The UK’s MedTech sector - generating an annual turnover of around £22 billion each year - is rooted in a strong foundation of startups and SMEs.
To support the research and development teams who aren’t afraid to face up to the trial-and-error nature of innovation, the UK government implemented a scheme that offers annual financial support.
This initiative is known as R&D Tax Credits.
What are R&D Tax Credits?
R&D Tax Credits were implemented over 20 years ago, to offer financial reward for innovation that’s previously taken place.
R&D Tax Credits allow startups and SMEs the chance to claim back up to 33% of the capital that they’ve spent on research and development over the past financial year.
It’s important to note that a company’s industry doesn’t determine eligibility for the R&D Tax Credit scheme. The only requisite is that a project involves undertaking activities that introduce new products and services, or improve existing offerings.
Needless to say, reclaiming up to 33% of R&D spending opens the door for game-changing re-investment for your MedTech startup. Better yet, every penny you receive through R&D Tax Credits is guaranteed upon approval, non-dilutive and non-repayable!
That’s right, you can access funds without racking up interest or sacrificing equity, with none of the pain that comes with sourcing external investment.
The R&D Tax Credit scheme branches into two avenues. The first, and more popular scheme is the SME Scheme. This route is aimed at companies with:
Less than 500 employees;
Less than $86M in gross assets;
Less than $100M in turnover.
Within this, your business’ financial position at the time of filing determines how much money you’re entitled to claim back.
Loss-making companies are entitled to claim 33% of total R&D eligible costs, which is paid directly, in cash, into your bank account.
On the other hand, profit-making companies can claim up to 25% of total R&D eligible costs, this time in the form of a tax credit.
Exceeding the metrics of the SME Scheme makes you eligible for the RDEC Scheme, which allows 13% of R&D costs to be reclaimed (subject to corporation tax).
Let’s run through an example of how R&D Tax Credits can work for MedTech innovation:
You’re in the early stages of developing an app that connects users with on-demand counselling from licensed mental health practitioners.
You’ve spent £130k over the past financial year on research and development, and you’re not yet turning over profit. By filing an R&D Tax Credit claim, you could receive a cash sum of £42,900.
This is exactly the boost your business needed to grow, scale, and start profiting.
Maximise R&D Tax Credits with Claim Capital
If you’re new to R&D Tax Credits, that’s a lot of information to take in. Fortunately, you don’t need to delve into the fine print. That’s what we’re here for!
Our R&D Tax Specialists at Claim Capital have over 20 years of combined experience in delivering successful and maximised R&D Tax Credit claims.
We provide an end-to-end service that takes on the entire R&D Tax Credit process, from analysing eligible spending and formulating financial & technical reports, to completing and submitting claims to HMRC.
Some R&D Advisors charge hefty fees of up to 20% of your claim size.
Others might demand upfront fees, only to have your claim rejected by HMRC.
Claim Capital believes in shared success, which is why we operate a cost-effective fixed fee - that’s only paid once your claim is received.
R&D Tax Credits fuel MedTech innovation
All sectors of R&D require a lot of hard work and perseverance. But the legislation regulations, and clinical trials involved in Medtech R&D make this journey a particularly lengthy one.
With the average claim for Medtech companies reaching £68,000 per year - R&D Tax Credits provide a springboard for UK healthcare innovation. And considering significant industry advancements, claim values are only expected to rise.
In 2019-2020, 82,950 businesses raised capital through R&D Tax Credits.
If you haven’t already, why not join them?
As a proud partner of Health Foundry, we’ll be sticking around to help you get the most out of R&D tax relief, year after year.
Words: Claim Capital
If you’re a Health Foundry member and you want to explore claiming R&D Tax Credits for the first time, or are unhappy with your existing provider, why not book in a free consultation with our R&D Tax expert and Health Foundry Community Supporter - Sophie Scoular? Get in touch with the Health Foundry team here for more information.