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15 March 2021
Zeeshan Khilji
The government has an ambitious target to raise total investment in research and development to 2.4% of UK GDP by 2027. R&D tax reliefs pay a crucial role in incentivising this investment by providing generous tax reliefs to companies undertaking qualifying R&D. It is therefore important to ensure that the reliefs remain up-to-date and well targeted.
At Budget 2021, the government announced a review of the reliefs, supported by a consultation with stakeholders to explore the nature of private-sector R&D investment in the UK, how that is supported and where changes may be appropriate. The consultation closes on 2 June 2021.
Overview of the R&D regime
R&D reliefs are currently available under two schemes:
Consultation topics
The broad-ranging consultation considers various aspects and invites responses on whether the two current schemes should be combined. The consultation also considers the location of R&D claims and whether R&D reliefs could be used to incentivise R&D with a social value, for example, development of green technology.
There is also a possibility that the government may consider restricting relief in some situations where the R&D activity takes place outside the UK.
The consultation broadly covers the following aspects:
The government is interested in receiving representations from a wide range of interested parties and stakeholders and is particularly interested in responses from:
• Firms that undertake R&D, or might consider doing so in future;
• Business groups and trade associations;
• Accountants and accountancy bodies; and
• Academic institutions (universities, scientific research bodies).
R&D tax reliefs are one of the most generous reliefs offered by the UK tax system and can be a very useful source of cash impetus particularly in the current climate, by providing cash tax savings of up to 33% of qualifying R&D expenditure.
With the government’s continued commitment to raise investment in research and development, R&D tax reliefs are here to stay. At ETC Tax, we have a dedicated team of R&D tax advisers who have several years of specialist experience of managing the R&D claim process and can handle your or your client’s R&D claims from start to finish.
If you would like to discuss whether you or your client qualifies for this general relief, please get in touch.
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