Spring Statement: PwC comments on R&D tax credits

Commenting on the Spring Statement announcement to improve Research & Development tax credits, Rachel Moore, R&D Partner at PwC, said:

There was a strong hint that a headline Research and Development (R&D) rate rise could be announced in the Autumn. This would help in compensating for the cash benefit reduction (10.5% to 9.7%) arising from the increasing corporation tax rate, but this could come too late for some businesses already planning their R&D budgets.  

There was some good news that the Government has listened to business’s calls to water down previous intentions to fully exclude overseas costs from R&D claims - there will now be exceptions to include R&D that needs to be undertaken overseas, such as for regulatory or environmental reasons. 

The expansion of R&D reliefs to include pure maths will be welcome, and should pull in more data science and artificial intelligence based R&D. This is on top of previous announcements to include data acquisition and cloud costs, where today there was a further extension of these proposals to include data storage costs.