Unlocking Innovation for Life Sciences Startups

For startups in the life sciences sector, research and development (R&D) is more than a technical process, it’s the engine of innovation and a cornerstone of growth. But what actually qualifies as R&D in the eyes of HMRC, and why should startups pay close attention?

R&D refers to activities undertaken to achieve an advance in science or technology. For life sciences startups, this might include developing a new diagnostic tool, experimenting with novel drug formulations, or improving a lab-based manufacturing process. Even if a project fails, as long as it seeks to resolve scientific or technological uncertainty (i.e. technical challenges), it may qualify.

Understanding what counts as R&D and what costs are eligible in making the claim is vital. It opens the door to tax credits that can return up to 27% of eligible expenditure, significantly extending your cash runway, and offsetting project costs. The UK government actively incentivises this innovation through R&D tax credits, enabling startups to fund and accelerate their product development. Early awareness can also help founders plan better, document appropriately, and maximise claims.

Talk to our specialists at MHA to ensure your life sciences startup is fully leveraging R&D tax credits, maximising cash flow, and supporting your path from innovation to impact.