Today’s budget has reinforced UK’s ambitions to become the new scientific Superpower, prioritising growth and high-tech investment. As part of this ambition, the Chancellor has launched a review of the R&D Tax relief schemes. The consultation document published today considers questions such as:
- how the two R&D Tax relief schemes work and how they interact with the way modern R&D is done;
- whether the R&D schemes should be amended to remain internationally competitive;
- whether the definition of R&D and the scope of what qualifies for relief remain fit for purpose;
- whether current rates of relief, and the difference in rates between RDEC and the SME scheme, remain appropriate.
As part of this, a review will also be undertaken into what costs companies can be included in the R&D Tax credit claims and whether the credits reflect modern R&D processes.
In our view, this is a very positive step as the R&D Tax credits schemes introduced a couple of decades ago, were getting restrictive, particularly in terms of the types of costs that can be claimed. For example, currently, the costs of data and cloud computing are ineligible R&D costs. For many companies operating on the Cloud, the exclusion of Cloud computing costs could significantly impact their claims. An overhaul of this and other aspects of the R&D Tax credits scheme is very welcome.
The full consultation document can be found here https://www.gov.uk/government/consultations/rd-tax-reliefs-consultation
For more information on how the R&D Tax credits scheme may benefit your company, please get in touch with us.