Vaccine research relief: expiry in 2017
Published 16 March 2016
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Who is likely to be affected
Companies that carry out R&D into prescribed types of vaccine and other medicine.
General description of the measure
This measure provides for the expiry of vaccine research relief, in respect of expenditure incurred on or after 1 April 2017.
Policy objective
Vaccine research relief (VRR) was introduced in 2003 as an additional research and development tax relief for companies undertaking research in the fields of vaccines and treatments for tuberculosis, malaria and HIV/AIDS. In 2011, VRR was first reduced, then withdrawn for small and medium sized enterprises. The relief is now only available to large firms and is claimed by fewer than 10 companies a year.
The low level of take-up of the relief suggests it does not have a significant impact on a company’s research decisions. The government believes that direct spending programmes like the recently announced Ross Fund offer a more effective and flexible approach to the production of medicines and vaccines.
Background to the measure
This measure was announced at Budget 2016.
Detailed proposal
Operative date
The relief will cease to apply to expenditure incurred on or after 1 April 2017.
Current law
Current law on VRR is included in Chapter 7 of Part 13 Corporation Tax Act 2009.
Proposed revisions
Legislation will be introduced in Finance Bill 2016 to repeal Chapter 7 of Part 13 of Corporation Tax Act 2009 in respect of expenditure incurred on or after 1 April 2017.
Summary of impacts
Exchequer impact (£m)
| 2016 to 2017 | 2017 to 2018 | 2018 to 2019 | 2019 to 2020 | 2020 to 2021 |
|---|---|---|---|---|
| - | nil | negligible | negligible | negligible |
This measure is expected to have a negligible impact on the Exchequer.
Economic impact
This measure is not expected to have any significant macroeconomic impacts.
Impact on individuals, households and families
The measure is not expected to impact on individuals, households or family formation, stability or breakdown.
Equalities impacts
There are no significant impacts on groups of people sharing protected characteristics differently to other groups, and no equalities impacts have been identified.
Impact on business including civil society organisations
This measure will have an impact on businesses that currently claim the relief, and is expected to result in a negligible saving for these businesses. The relief is only available to large firms and is claimed by fewer than 10 companies a year and those companies will no longer be able to claim the relief. These companies will see a small reduction in their ongoing costs as a result of no longer calculating and claiming the relief.
This measure will have no impact on civil society organisations.
Operational impact (£m) (HM Revenue and Customs (HMRC) or other)
There will be no significant impact on HMRC, the relief is claimed by fewer than 10 companies a year, generating a negligible administrative saving.
Other impacts
Health impact assessment: due to the low level of take-up of VRR, this proposal would not cause ill health, nor does it affect the social, environmental and economic conditions that impact on health. The proposal does not affect individuals’ ability to improve their own health, or impact on access to health services, or impact on global health.
Other impacts have been considered and none have been identified.
Monitoring and evaluation
The measure will be monitored through information collected from tax returns until the final claims are completed.
Further advice
If you have any questions about this change, please contact Aziz Yusuf on Telephone: 03000 544463 or email: aziz.yusuf@hmrc.gsi.gov.uk.