Are R&D Tax Credits for Cloud and Data Analytics Getting Closer?

Why is this change so important, why does it matter and if it does happen what could this change actual mean?

In the March Budget the Chancellor announced a wide scale review into the R&D Tax relief scheme. The review aims to ensure the existing schemes remain fit for purpose and to build on a previous consultation to determine whether data and cloud computing services should be brought into the scope of R&D tax credits relief scheme.

This was welcomed news for techUK and our members. Expanding the scope of qualifying expenditures for R&D Tax Credits to include data and cloud computing has been an issue that techUK has been raising with the Government for many years. 

But why is this change so important, why does it matter and if it does happen what could this change actual mean?

Expanding the scope of qualifying expenditures for R&D Tax Credits to include data and cloud computing will support organisations to continue and scale up their digital transformation.  As COVID-19 has shown data and cloud computing have been vital not only to the public health response. Countless businesses have relied on data insights to understand changes in markets, adapt to the new normal and research and develop new products and services that will support future growth. Cloud powered systems have enabled companies to remain in contact, share information and work collaboratively to develop new products and solve problems when they could no longer be in the same room.

Organisations are now considering the digital tools that will be key to their recovery and future resiliency against situations like the pandemic happening again. Cloud and data services are high on the list for organisations across all size and sector, particularly SMEs that may have only just started their journey to digital transformation last year due to the pandemic. As businesses seek to build back better, providing R&D tax credit support to utilise cloud computing capabilities and use data to support research and product development will be hugely important to stimulating the digital revolution we need to recover from the COVID-19 crisis.

The experiences of last year has show to businesses the power of these technologies in times of crisis. But we already knew that the adoption and use will be vital to long term economic and productivity growth. For example, Lloyds 2018 Business Digital Index analysis found that small businesses who were using a combination of cloud-based IT systems, online accounting software and digital training tools had £103,000 higher annual turnover than those using none. In the 2019 Index this has risen to a higher annual turnover of £262,000.[1] A clear economic case for why schemes that could support more SME’s to adopt and use cloud services is needed now more than ever.

Going forward we know that both data and cloud services will be important to enabling more businesses to be in a position to adopt and use the latest cutting-edge technologies, such as AI.

For those businesses having the right digital infrastructure and data foundations in place will be key. The adoption and use of cloud and data services now will enable more UK businesses to get a head start and realise the benefits of the cutting-edge data driven technologies today that we know are going to be vital to the UK’s future. 

So are R&D Tax Credits for cloud computing and data services going to become a reality? We hope so. But not just yet.

The consultations announced by the Chancellor will now run until the 2nd June to gather more input and views on the next steps that should be taken. Now is the time to make the case for why this change is needed and how it can support businesses, particularly SMEs, to gain access and use the digital tools and technologies that will be key to their future.

techUK will be working with its members to feed into this consultation and to make the case for how the R&D Tax relief schemes can support companies across the UK to build the digital foundations and infrastructure they need to digital transform and not be left behind as the UK’s digital economy and society continues its digital evolution.

If you would like to be involved in the development of techUK’s consultation response on the R&D Tax relief scheme please get in touch to be part of this work.

Sue Daley

Sue Daley

Director, Technology and Innovation

Sue leads techUK's Technology and Innovation work.

This includes work programmes on cloud, data protection, data analytics, AI, digital ethics, Digital Identity and Internet of Things as well as emerging and transformative technologies and innovation policy. She has been recognised as one of the most influential people in UK tech by Computer Weekly's UKtech50 Longlist and in 2021 was inducted into the Computer Weekly Most Influential Women in UK Tech Hall of Fame. A key influencer in driving forward the data agenda in the UK Sue is co-chair of the UK government's National Data Strategy Forum. As well as being recognised in the UK's Big Data 100 and the Global Top 100 Data Visionaries for 2020 Sue has also been shortlisted for the Milton Keynes Women Leaders Awards and was a judge for the Loebner Prize in AI. In addition to being a regular industry speaker on issues including AI ethics, data protection and cyber security, Sue was recently a judge for the UK Tech 50 and is a regular judge of the annual UK Cloud Awards.

Prior to joining techUK in January 2015 Sue was responsible for Symantec's Government Relations in the UK and Ireland. She has spoken at events including the UK-China Internet Forum in Beijing, UN IGF and European RSA on issues ranging from data usage and privacy, cloud computing and online child safety. Before joining Symantec, Sue was senior policy advisor at the Confederation of British Industry (CBI). Sue has an BA degree on History and American Studies from Leeds University and a Masters Degree on International Relations and Diplomacy from the University of Birmingham. Sue is a keen sportswoman and in 2016 achieved a lifelong ambition to swim the English Channel.

[email protected]
020 7331 2055

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Laura Foster

Laura Foster

Head of Technology and Innovation, techUK

Laura is techUK’s Head of Programme for Technology and Innovation.

She supports the application and expansion of emerging technologies, including Quantum Computing, High-Performance Computing, AR/VR/XR and Edge technologies, across the UK. As part of this, she works alongside techUK members and UK Government to champion long-term and sustainable innovation policy that will ensure the UK is a pioneer in science and technology

Before joining techUK, Laura worked internationally as a conference researcher and producer covering enterprise adoption of emerging technologies. This included being part of the strategic team at London Tech Week.

Laura has a degree in History (BA Hons) from Durham University, focussing on regional social history. Outside of work she loves reading, travelling and supporting rugby team St. Helens, where she is from.

[email protected]

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