28/03/2023
💡 Changes to R&D Tax Reliefs - Expanded Qualifying Expenditure Activities:
From the recent legislation published by HMRC which highlights amendments to R&D Tax reliefs, due to come into effect on 1st April 2023, we discovered that there are a number of additions to qualifying expenditure activities which could potentially pose the opportunity for a business to claim additional R&D tax relief.
The following changes apply to both the Research and Development Expenditure Credit (RDEC) and the Small or Medium-Sized Enterprise (SME) schemes.
Pure Mathematics ➕
HMRC have made a change to the definition of R&D to include pure mathematics. In the past, businesses may have included this expenditure under areas such as software development which could have left claims open to questioning by HMRC. The updated definition of R&D now includes standalone advances in mathematics. However the introduction of this expenditure means companies can rest assured that their activities should be accepted without any confusion.
Cloud Computing Costs ☁
The addition of cloud computing costs to R&D expenditure will be long overdue for certain companies in the technology sector who rely heavily on the use of creating, maintaining and sorting data onto the cloud as way of research and development activities. This change will give businesses, who are subject to working with large amounts of data or share data amongst their team, the chance to reclaim back some of the costs in relation to maintaining this.
Dataset costs 🖥
More positive news for tech companies. The introduction of dataset costs to the R&D expenditure activities will allow companies who purchase licenses for large collections of data to claim back some of this qualifying costs. Data sets or licenses which the company has a contractual right to publish, share or otherwise communicate the date would not be an allowable cost.
The inclusion of this new activity will be very beneficial for companies who operate in AI and machine learning, making these operations more affordable and allowing further training in these areas.
If you have any questions in relation to these activities, or would like to inquire about R&D Tax Relief, please get in touch with us by contacting: ➡ [email protected]
