Following the review of research and development (R&D) tax reliefs launched at Budget 2021, the government have announced significant new measures which will apply from 1 April 2023.
What is the policy objective?

The government has set an ambitious target to raise total investment in R&D to 2.4% of UK GDP by 2027. As such, R&D tax reliefs have a key role in incentivising this investment by reducing the costs of innovation, as well ensuring that the reliefs remain up-to-date, competitive and well-targeted.

What key measures are included?

The government have announced the following measures, which will apply for accounting periods on or after 1 April 2023:

  • Extending qualifying expenditure – to incentivise R&D using modern computational approaches, the government is extending the scope of qualifying expenditures to include the costs of datasets and cloud computing.
  • A refocus on UK innovation – to ensure the maximum benefit to the UK from the spillovers of R&D activity incentivised by the reliefs, relief for subcontracted work and the cost of externally provided workers will be limited to focus it on UK activity.
  • Improving compliance – to tackle abuse of the reliefs, all claims to the R&D reliefs – either for a deduction or a tax credit – will in future have to be made digitally (excluding those companies exempt from the requirement to deliver a company tax return online).
Get in touch

For further information and guidance on these complex changes to R&D tax relief, get in touch with a member of our tax team below.