In this second of our Budget 2021 breakdown series of advice blogs, we provide further insight into the changes in Research & Development tax relief announced by the Chancellor.
What is research and development (R&D)?
R&D is a great tax relief that when available, reduces Corporation Tax and can potentially provide a cash refund.
For further information on R&D for SMEs, please see my previous article ‘What R&D tax relief is available for SMEs?’ written earlier this year.
R&D tax reliefs are also available for large companies through the RDEC scheme and further details are available here.
What’s changing?
During his Autumn budget, the Chancellor announced the following changes;
- Qualifying expenditure will include data and cloud costs.
- R&D reliefs will be focused towards innovation in the UK.
- Further measures will be introduced to target abuse and improve compliance.
The Government have said that these changes will be legislated for in Finance Bill 2022-23 and take effect from April 2023, so there is very little detail available right now.
It is likely however, that relief will be restricted or withdrawn entirely where companies subcontract any of their qualifying R&D expenditure overseas.
Further advice
Further detail will follow in due course, and we will update you as and when it is released.
For any queries, or to consider whether your company could be eligible for R&D tax relief, please do contact Inspire and our specialist tax team will be happy to help you.