Accountants for biotech and health tech

Biotech: long runways, big claims, hard questions.

Years before revenue, most of the spend subcontracted, and an R&D position that turns on who commissioned the work and where it was done.

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The short answer

We act for UK biotech, life sciences and health-tech startups: R&D claims where most of the spend is subcontracted, clinical trial payments, university spinout share structures, and the long pre-revenue runways that make cash forecasting the whole job.

Biotech breaks most of the assumptions built into small-company accounting. There is no revenue for years, the largest costs are paid to other people, the share register usually includes a university, and the difference between a good and a bad R&D claim is six figures rather than four.

The question that decides most of it is deceptively simple: who commissioned the research? Under the merged scheme the company that intended or contemplated the R&D claims it — and HMRC means a specific appreciation of what would be done, not general awareness that somebody was doing science. For a company whose spend runs through CROs and academic partners, that is the whole argument.

Where the money actually goes

What a pre-revenue life sciences year looks like

Subcontracted research

Payments to contract research organisations and academic partners, generally restricted to 65% for unconnected parties. Who claims what depends on who commissioned the work, which is a contract question before it is a tax one.

Clinical trial payments

Payments to trial subjects are specifically provided for in the rules and are one of the more commonly missed categories in a first claim.

The spinout share register

University equity, founder shares, and often a translation fund. The structure is usually inherited rather than chosen, and it is worth understanding before it meets an institutional round.

A runway measured in years

Cash forecasting is not a quarterly exercise here, it is the central management tool. Grant drawdowns, milestone payments and trial timetables all move, and the model has to move with them.

R&D relief in this sector

The questions HMRC will actually ask

Who commissioned it. Where R&D is contracted out, the customer claims if it intended or contemplated that R&D would be done — which requires a specific appreciation of the work, not mere awareness. Where the contractor took the initiative, or the customer is not within the charge to UK tax, the position flips. For a company running its programme through CROs this determines the entire claim, and it is decided by contracts written long before anyone thinks about tax.

Where it happened. Overseas R&D has been excluded since April 2024 unless the conditions genuinely could not be replicated in the UK. Regulatory or geographical requirements that make a trial impossible to run here can qualify; cost and availability of staff explicitly cannot. A multi-site trial needs this settled site by site.

Intensity. A loss-making company spending at least 30% of total expenditure on qualifying R&D can use the intensive route at roughly 27p in the pound. Most genuine biotechs clear that threshold with room to spare, and the calculation is worth doing before anything is filed.

How we handle R&D claims SEIS and EIS

A worked example

When most of the spend is somebody else's invoice

A loss-making UK biotech, pre-revenue. Total expenditure £1,200,000. Of that, £800,000 is paid to an unconnected contract research organisation and £180,000 is in-house research payroll.

Subcontracted research is restricted to 65% for an unconnected party: £800,000 × 65% = £520,000.
Qualifying total: £520,000 + £180,000 = £700,000.
Intensity: £700,000 ÷ £1,200,000 = 58%, so the intensive route applies.
Intensive route: £700,000 × 186% = £1,302,000 surrendered, at 14.5% = £188,790 in cash.

All of which depends on one prior question: did this company commission that research, with a specific appreciation of what would be done? If the CRO took the initiative, the claim is the CRO's, not yours. That is settled by contracts signed long before anybody thought about tax, which is why we read them first.

Illustrative figures, chosen to show how the arithmetic behaves. Your numbers will differ, which is exactly why the calculation gets done before anything is filed.

What we do for you

The job, end to end

The contracted-out analysis done properly, so the right company claims and the claim survives an enquiry
Clinical trial payments, consumables and subcontracted research costed and evidenced
The intensity test run before the route is chosen
Spinout share structures, founder equity and section 431 elections
SEIS and EIS advance assurance, and the certificates your investors need afterwards
Cash forecasting built around trial milestones and grant drawdowns rather than a calendar

Questions

Straight answers

Most of our research is done by a CRO. Who claims the relief?

Whoever commissioned the R&D, which in most cases is you — but only if you intended or contemplated that R&D would be done, meaning a specific appreciation of the work rather than general awareness. Where the contractor took the initiative, or where the customer is outside the charge to UK tax, the contractor may claim instead. It turns on the contracts, so it is worth reviewing them before the first claim rather than after an enquiry.

Do payments to clinical trial subjects qualify?

Yes — payments to subjects of clinical trials are a specific category of qualifying expenditure. They are one of the most commonly missed items in a first biotech claim, usually because they do not look like the categories a general accountant is expecting.

Our trial runs partly overseas. Is that spend claimable?

Only if the conditions genuinely could not be replicated in the UK — for example a regulatory or geographical requirement that makes running it here impossible. Cost and the availability of staff are explicitly disregarded as reasons. A multi-site trial usually needs the position settled site by site before the claim is built.

We are a university spinout. Does that change anything?

It changes the share register rather than the tax. A university holding, a translation fund and founder equity all need to sit together in a structure an institutional investor will accept, and vesting and section 431 elections are usually worth putting in place early. The R&D position is the same as any other company's; the ownership question is the one that needs attention.