Back in the 2021 Spring Budget, Rishi Sunak announced a consultation of the R&D tax relief scheme. Since the initial consultation has been completed, some proposed changes have been outlined in the Autumn Budget including:
Draft legislation is expected to be published in summer 2022 with changes taking effect in April 2023.
Responses from the consultation highlighted that managing data and cloud infrastructure is a vital part of the R&D process. Since launching the R&D tax relief scheme, the world has changed with technology having a part to play in this. Expenditure such as data purchases and cloud hosting should qualify as expenses.
From April 1st 2023, the following new categories of qualifying R&D expenditure will be eligible for relief:
Focusing on innovation in the UK
Under the existing rules, companies are eligible to claim R&D tax relief for overseas research they conduct. In order to ensure the UK economy is benefitting from the tax relief as intended, some changes have been announced:
Companies will still be able to claim R&D tax relief on the costs of software and consumables sourced overseas, as well as payments for clinical trial volunteers overseas and payments for data and cloud services sourced overseas, as these are considered inputs to activity in the UK.
In recent years there have been growing concerns over the abuse and boundary-pushing of the R&D tax relief scheme. There have been instances of advisors taking advantage of companies that are not familiar with claiming R&D tax relief. To combat this, several steps will be introduced to improve compliance, including:
How to prepare for upcoming changes to R&D tax relief?
With the new changes coming into effect soon, it’s essential to adopt a robust approach to claiming R&D tax credits. If you don’t, you run a higher risk of an enquiry from HMRC and your claim being unsuccessful.
If you would like to learn more about how to make sure your claim is robust and optimised, get in touch and speak with one of our experts.
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