Cloud Computing and Data costs to be covered under expanded R&D tax credit
28 Oct 2021 01:39 PM
The Chancellor has acted on long standing ask from techUK and our members to expand the coverage of the R&D tax credit in the Autumn Budget and Spending Review.
In the Autumn Budget 2021, the Chancellor announced that R&D tax reliefs will be reformed to support modern research methods by expanding qualifying expenditure to include data and cloud computing costs.
techUK welcomed this announcement which we and our members have been advocating since 2017 for expanding the scope of qualifying expenditures to cover key intangible assets, with a specific ask to include data, data analytics and cloud computing. This means that companies can finally use the UK’s R&D support system to cover data driven research, which is good for science, product development and productivity.
This expansion better aligns the UK’s R&D system with the way companies use technology to transform their businesses in the modern world. During 2020, the adoption of cloud computing services increased in the UK, driven largely by the impact of the COVID-19 pandemic. Evidence show that 51% of UK business leaders believe investment in cloud computing “saved” their organisations during the pandemic, and 60% of respondents planned to increase and scale their cloud usage in 2021.
In techUK’s submission to the Autumn Budget and Spending Review 2021 we and our members called for an extension of the R&D tax credit arguing this would enable businesses to invest more in R&D and to modernize the UK’s R&D tax credit which, over the had begun to fall behind changes in the economy as well as competitor regimes abroad.
Welcoming the announcement techUK CEO Julian David yesterday said:
“The Chancellor’s plan to reform the R&D tax credit system to allow businesses to better utilise data and cloud computing services is a major upgrade to the UK’s support for research and development, marking a major step toward boosting UK productivity.
“At techUK we have been calling for the extension of tax reliefs to cover cloud computing and data costs for some time. The new regime recognise the way companies use technology to transform their businesses in the modern world. In particular we can see that smaller businesses that use cloud computing and data-driven technologies have increased their annual turnovers in excess of £250,000."
techUK’s comprehensive Budget and Spending Review submission is available here. Read a summary of our submission by clicking here.