Rachel Moore, innovation incentives partner at PwC, said:
“While changes have been announced to reform R&D credits, it looks likely there will be both winners and losers. As previously trailed, the good news is that eligible R&D costs will be expanded to include data acquisition and cloud computing costs. With many businesses moving to the cloud, this is likely to have wide-ranging benefits.
“However, this looks set to be paid for by the exclusion of overseas costs from claims bringing the UK regime in line with other countries such as the US and Australia. This could potentially reduce the value of R&D credits significantly, particularly for some large global groups where increasingly R&D is undertaken collaboratively through global teams.
“Another sting in the tail is that the increase in corporation tax rates from 2023 means the cash value of R&D credits for large businesses will reduce. Large businesses will be disappointed that the headline R&D credit rate has not been increased to compensate for this.
“Following the consultation earlier this year, we welcome the government announcement that they will look to tackle abuse and improve compliance of the reliefs with further details to be announced later in the autumn.”
At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 155 countries with over 284,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.
PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.
© 2021 PwC. All rights reserved