We already knew that quite a few exciting things were going to be happening in the world of R&D tax relief. HMRC has been talking for a while about the reforms it wants to make but has not been clear on the detail.
Now we have seen the Spring Budget, things are slightly clearer in terms of what new costs will be allowable, but we are still eagerly awaiting final details on what the reforms to tackle abuse of the R&D schemes will look like. The main points relevant to R&D mentioned in the Spring Budget are:
All cloud computing costs associated with R&D, including storage, will qualify for relief.
Allowable expenditure on overseas R&D activities will reduce and qualify only where there are:
material factors such as geography, environment, population or other conditions that are not present in the UK and are required for the research – for example, deep ocean research.
regulatory or other legal requirements that activities must take place outside of the UK – for example, clinical trials.
The definition of R&D for tax reliefs will be expanded by clarifying that costs relating to pure mathematics may be included in a claim.
The government will consider increasing the generosity of RDEC to boost R&D investment in the UK.
As previously announced, the government is planning the creation of a new cross-cutting HMRC team focused on tackling abuse of these reliefs.
We are looking forward to seeing the final detail once the legislation is published towards the end of the year.