Richard Turner, who leads FTI Consulting Life Sciences practice, tells us about a new publication from the Medicines Manufacturing Industry Partnership showcasing the attractiveness of the UK for medicines manufacture.
The UK has created a very favourable tax environment for innovation and commercialisation. To help communicate this to potential investors in the UK, the Medicines Manufacturing Industry Partnership – a collaboration between the BIA, ABPI and government – has produced a Fiscal Paper setting out the case for the UK as the location of choice for Medicines Manufacture.
In the past, UK companies would locate elements of the supply chain across two or more territories in order to access more competitive tax rates and incentives. The UK tax landscape has changed in recent years to present a much more compelling case for retaining the entire supply chain from development through to manufacture in the UK. The tax benefits include:
There can be further efficiency through the lower cost of compliance with reduced cross border transactions and product flow.
More recently, the US administration has issued proposals to improve its tax competitiveness given its headline federal tax rate of 35%. At the time of writing, it is understood that the original proposals are likely to be diluted if and by the time they are legislated and that the overall package is likely to be tax neutral.
In summary, not only should a UK company which develops and manufactures in the UK enjoy a long term effective tax rate of 11%-13% it will receive substantial R&D tax credits along the way of up to 33p/£. For further details please see the MMIP’s Fiscal Paper with a more concise summary in the Fiscal Guide.