For most biotech companies the relief that matters is Enhanced R&D Intensive Support (ERIS), which pays loss-making, R&D-intensive SMEs up to 26.97p per £1 of qualifying spend in cash. A typical pre-revenue biotech passes the 30% intensity test with room to spare, and since April 2024 grant funding no longer reduces the relief. The points that need care are the SME test for venture-backed groups, the PAYE cap where lab work is heavily outsourced, and the claim notification deadline that silently invalidates late first claims.
Why is ERIS the biotech scheme?
Because its conditions describe a biotech. ERIS applies to a company that is an SME, is loss-making, and whose relevant R&D expenditure is at least 30% of its total relevant expenditure. A pre-revenue biotech spending most of its budget on discovery, preclinical work and platform development usually clears 30% by a wide margin.
The value is the standard worked example: £100,000 of qualifying spend, with sufficient losses, gives £100,000 x 186% x 14.5% = £26,970 as a payable credit, and the credit is not taxable. The same company under the merged scheme would receive £16,200. The full conditions and mechanics are on our ERIS page, and the ERIS intensity calculator tests the 30% threshold on your own numbers.
Two caveats catch biotechs specifically. The SME definition (fewer than 500 staff, and either turnover under €100m or a balance sheet under €86m) aggregates connected and partner enterprises, so investor and group structures can change the answer for a company that looks small on its own. And the intensity ratio includes connected companies on both sides. There is a one-year grace period where intensity dips below 30% after a qualifying year, which helps companies whose spending steps up unevenly.
A biotech that reaches profitability moves to the merged scheme: a 20% taxable credit worth £15,000 net per £100,000 of qualifying spend at the 25% corporation tax rate. The claim value calculator covers both schemes.
Platform or asset development: does it matter for the claim?
Both can qualify; the test does not distinguish business models. What the DSIT guidelines require is an advance in the knowledge or capability of the field, not just the company, achieved by resolving uncertainty a competent professional could not readily resolve.
An asset company meets it through candidate programmes, where behaviour in biological systems cannot be predicted from existing knowledge and must be established experimentally. A platform company meets it where the platform itself pushes the field’s capability: a delivery technology, a discovery engine, an analytical method that existing approaches cannot match. What does not qualify is the routine application of established methods, running a validated assay to a known protocol, however commercially important the output.
The practical discipline is drawing project boundaries around the uncertainty being resolved, not around funding rounds or programme names. Our guide to what counts as qualifying R&D covers the definition and the documentation HMRC expects.
Do Innovate UK grants reduce a biotech’s R&D claim?
No. For accounting periods beginning on or after 1 April 2024, grant funding, including Innovate UK, neither blocks nor reduces relief under the merged scheme or ERIS. The old subsidised-expenditure restriction was abolished with the old SME scheme, and neither current scheme is notified state aid. Much of what is written online still reflects the old rule, and grant-funded biotechs are the companies most often misadvised because of it. See grant funding and R&D tax relief for the current position and Innovate UK grants and R&D tax relief together for how the two supports combine on one project.
Will the PAYE cap limit the credit?
It can, and biotech is the classic case. Payable credits under both current schemes are capped at £20,000 plus 300% of the company’s relevant PAYE and NIC. A biotech running a large outsourced programme through a small internal team has a small payroll, and the cap is calculated from that payroll.
An exemption applies where the company is creating or managing intellectual property and its connected-party subcontracting stays low. Most genuine biotechs can meet it, but it should be established before the claim is built, not discovered after the credit is restricted.
Outsourcing raises two further rules. Payments to unconnected subcontractors, including CROs, enter the claim at 65%, and subcontracted work generally qualifies only where it is undertaken in the UK, with a narrow exception for conditions the UK cannot supply, such as clinical trial populations. Who claims on commissioned work, sponsor or CRO, is covered in CRO contracts and R&D tax relief.
Making a first claim? Watch the notification deadline
A company claiming for the first time, or that has not claimed in the previous three years, must send HMRC a claim notification within six months of the end of the period of account. Missing the window invalidates the claim entirely, even where the normal amendment deadline is still open. Biotechs are disproportionately first-time claimants, so this deadline belongs in the calendar from incorporation. The cash-flow planning that follows, intensity forecasting, grace-period strategy and credit timing, is worked through in ERIS for pre-revenue biotech and medtech.
Why biotechs work with LimestoneGrey
LimestoneGrey is a firm of chartered tax advisers and chartered accountants specialising in R&D tax relief, regulated by ICAEW and registered with HMRC, working with biotech companies across the UK from Cardiff. In 2026 we were a finalist at the One Nucleus Awards for Most Innovative Professional Services Company. Every claim is prepared by our specialist team and signed off by a chartered adviser, and enquiry support is included as standard: HMRC checks roughly one in six R&D claims, and we stand behind the claims we prepare.
“We’ve worked with LimestoneGrey for several years and their professionalism, speed and clear approach make them a pleasure to work with. They quickly understand the complexities of our R&D and ensure the claims process is straightforward, fair and accurate.”
Sandy, Jellagen Limited
Biotech sits within our wider life sciences practice. If you are pre-revenue and wondering what your spend is worth, or already claiming and wanting a second view, contact us: we will give you a straight answer on scheme, value and deadlines before any work starts.
Written by Matthew Jones ACA CTA. Last reviewed July 2026.