The give and take of R&D relief - PKF Francis Clark
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The give and take of R&D relief

The Spring Budget this year saw the launch of a consultation document into various aspects of the UK R&D tax relief.  The consultation period ran until June 2021 and today’s Budget saw the first announcements driven by that consultation paper and the responses which will see an overhaul of the R&D tax regime with effect from April 2023.

The Chancellor announced an increase in funding to Innovate UK which supports private R&D investment projects increasing to £1bn by 2024-25. He has also proposed that the qualifying expenditure categories to which R&D tax reliefs apply is widened to include data and cloud computing to update the relevance of the relief for modern research techniques which have changed significantly since the relief was first introduced in 2000 and then re-defined in 2004.

There is currently no restriction on the location of the qualifying R&D activities; subcontracted costs may be undertaken overseas. In an attempt to ensure that the UK taxpayers’ contribution to providing this relief is best targeted at providing the best results for the UK overall, availability of the relief will be restricted to expenditure on UK R&D activities only from April 2023.

There is little detail at the moment and the legislation is yet to be written to amend the current rules. We will see these changes come through in the 2022/23 Finance Bill.

For more Autumn Budget analysis, visit our Budget hub.

FEATURING: Damian Lannon
Damian specialises in corporate and business tax advisory and heads the Exeter corporate tax and tax advisory team. He provides advice on all corporate tax… read more
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