The main points from the budget are
Data and cloud computing costs
It was announced that from April 2023 the scheme will expand the definition of qualifying expenditure to include the costs of accessing datasets, and licensing computer software that’s hosted in the ‘cloud’.
Overseas development work
Currently, the R&D tax credit scheme has been open to claims for work done abroad. However, recent statistics show that UK companies are claiming £47.5bn of tax credits but only spending £25.9bn on R&D. The government attributes this £21.6bn gap to the fact that business is being done outside the UK.
The government suggests that the ability to claim UK tax relief for R&D done overseas costs the UK taxpayer hundreds of millions of pounds a year. But it does not sufficiently boost R&D spend by UK businesses. In contrast, many similar schemes in other countries, including Australia and the USA, do not offer relief for R&D activities performed overseas.
So, changes are expected to the scheme to refocus the reliefs towards innovation in the UK. The actual detail of how the change will work has not yet been announced.
Tackling abuse of the scheme
The government will shortly set out their plans to tackle abuse of, and improve compliance with, the R&D tax schemes.