R&D Tax Relief for large companies will increase, the Treasury announced today.
The rate will rise from 12% to 13%, as pledged by the Conservative party in their General Election manifesto.
The changes will apply from 1 April 2020.
The Government said the move was about “supporting businesses investing in R&D and helping to drive innovation in the economy.”
The official Treasury Budget papers stated: “Private investment will be crucial to meeting the Government’s objective of increasing economy-wide investment in R&D to 2.4% of GDP by 2027, and to creating an innovation-intensive and technology-driven economy. The Budget will support and encourage this by increasing the rate of Research & Development Expenditure Credit from 12% to 13%.”
Chancellor Rishi Sunak said investment in R&D is increasing. The Treasury announced this would rise “to a record £22bn a year”. It said: “As a percentage of GDP, it will be the highest in nearly forty years - higher than the US, China, France and Japan.”
The Conservative party had said it would review the definition of R&D so that “important investments in cloud computing are also incentivised”. Indeed, there is a pledge in the Treasury papers to consult on whether qualifying R&D tax credit costs should include investments in data and cloud computing.
With a 20% increase in the total number of R&D tax credit claims year-on-year and an indication that 'home-grown innovation' will be the key driver in a new high skill, high wage economy, the demand for R&D tax credits is unlikely to drop anytime soon.
Many practices are already helping clients with R&D tax credits, while others will be planning to increase - or introduce new services in this area.
How can IRIS help?
The new R&D hub in IRIS Business Tax makes it as easy as possible to make R&D tax claims for your clients. The hub features simplified data entry and increased automation so you can complete R&D claims quickly and easily.
Please get in touch with our team to arrange a full demonstration and make the most of the R&D opportunity.