FINANCE
BY ADAM LACCHIN , TAX DIRECTOR , AZETS
R & D Tax Relief
RISHI SUNAK ACKNOWLEDGES INNOVATION IN THE UK IS LAGGING BEHIND . BUT WHAT ARE HIS PLANS TO OVERCOME THIS ?
In the Chancellor ’ s recent Spring Statement , Sunak acknowledged that innovation in the UK is lagging behind other advanced economies , with investment by businesses in Research & Development ( as a % of GDP ) less than half the OECD average . This is against a backdrop of a greater spend on Tax Reliefs for R & D in the UK than in almost every other country .
To address this anomaly the Chancellor re-affirmed a commitment to ongoing reform of R & D Tax Credits , to make them more effective and better value for money for the UK taxpayer .
The headline announcements were :
• Extending the definition of Qualifying Activity to include pure mathematics , and a further expansion of allowable cloud computing and data storage costs from 2023 .
• A partial reversal of the Autumn 2021 announcement to disallow all R & D activity undertaken overseas .
• Consideration to be given to increasing the generosity of the RDEC regime , applicable to large companies and some smaller businesses , to boost investment and to bring this tax relief more into line with the generosity of the SME R & D Tax Credits .
• Consideration of what more can be done to tackle the abuse of R & D tax reliefs , particularly in the SME Scheme , ahead of Budget 2022 .
The overall picture seems to be a positive one for companies eligible for R & D Tax Relief . For example , pure maths has now been brought into the definition of R & D Qualifying Activity , recognising the huge contribution to innovation by businesses working in areas such as robotics and AI .
We also welcome the re-think on overseas qualifying costs , with a recognition that some UK companies have little choice but to undertake their R & D activities offshore for legal , regulatory and geographical reasons .
Any future increases in the generosity in the RDEC provisions will be very welcome to the many SMEs we see who are making claims under this regime , and we wait to hear how this proposal will develop in Autumn ’ s budget .
Finally , the Chancellor ’ s commitment to tackling of abuses allows for peace of mind . At Azets , we continue to witness certain players in the market approaching clients with erroneous and dishonest interpretations of R & D Tax Relief . It is vital for the integrity of the scheme that these abuses are challenged and rooted out .
Get the right advice and start your R & D Tax Relief claim
At Azets , our trusted business advisors are on hand to offer R & D tax relief advice and have a wealth of experience in making R & D claims in a wide range of industries and sectors . Our specialists have an excellent track record in making successful , HMRC-compliant claims and have delivered significant tax savings for our clients .
Using our deep knowledge of the government support available , the qualifying criteria , and the application process , we ’ ll help you to unlock those all-important incentives and cash injections .
Get in touch with the Azets specialist R & D team today to find out more and get started with your claim .
adam . lacchin @ azets . co . uk
Local offices : Ashford : 01233 629 255 / Canterbury : 01227 454 861 Maidstone : 01622 690 666 / Orpington : 01689 827 505 Sandwich : 01304 249 997
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