Cloud Computing and Data costs to be covered under expanded R&D tax credit
In the Autumn Budget 2021, the Chancellor announced that R&D tax reliefs will be reformed to support modern research methods by expanding qualifying expenditure to include data and cloud computing costs.
techUK welcomed this announcement which we and our members have been advocating since 2017 for expanding the scope of qualifying expenditures to cover key intangible assets, with a specific ask to include data, data analytics and cloud computing. This means that companies can finally use the UK’s R&D support system to cover data driven research, which is good for science, product development and productivity.
This expansion better aligns the UK’s R&D system with the way companies use technology to transform their businesses in the modern world. During 2020, the adoption of cloud computing services increased in the UK, driven largely by the impact of the COVID-19 pandemic. Evidence show that 51% of UK business leaders believe investment in cloud computing “saved” their organisations during the pandemic, and 60% of respondents planned to increase and scale their cloud usage in 2021.
In techUK’s submission to the Autumn Budget and Spending Review 2021 we and our members called for an extension of the R&D tax credit arguing this would enable businesses to invest more in R&D and to modernize the UK’s R&D tax credit which, over the had begun to fall behind changes in the economy as well as competitor regimes abroad.
Welcoming the announcement techUK CEO Julian David said:
“The Chancellor’s plan to reform the R&D tax credit system to allow businesses to better utilise data and cloud computing services is a major upgrade to the UK’s support for research and development, marking a major step toward boosting UK productivity.
“At techUK we have been calling for the extension of tax reliefs to cover cloud computing and data costs for some time. The new regime recognise the way companies use technology to transform their businesses in the modern world. In particular we can see that smaller businesses that use cloud computing and data-driven technologies have increased their annual turnovers in excess of £250,000."
Julian David is the CEO of techUK, the Digital Technology Trade Association.
Julian leads techUK's 60 strong team in representing over 800 member companies, comprising global and national champions and more than 500 SMEs. He is a member of the UK Government and Industry Cyber Growth Partnership, the Digital Economy Council and the Department of International Trade’s Strategic Trade Advisory Group. He is also the Vice President for National Trade Associations, on the Executive Board of DIGITALEUROPE, Vice President representing Europe on the board of WITSA the Worldwide IT Association, and a member of the board of the Health innovation Network, the South London Academic Health Science Network.
As Head of Policy Neil leads techUK's domestic policy development. He regularly engages with UK and Devolved Government Ministers, senior civil servants and Members of the UK’s Parliaments with the aim of supporting government and industry to work together to make the UK the best place to start, scale and develop technology companies.
Neil joined techUK in 2019 to lead on techUK’s engagement in the UK-EU Brexit trade deal negotiations, as well as leading on economic policy.
He has a background in the UK Parliament and in social research. Neil holds a masters degree in Comparative Public Policy from the University of Edinburgh and an undergraduate degree in International Politics from City, University of London.
Pablo Derpich is the Policy Manager for Economy and Innovation at techUK.
Before joining techUK, Pablo worked in Economic Policy research on the topics of innovation and development for governmental and non-governmental organisations (NGOs) in Latin America and the United Kingdom.
Pablo has a degree in Economics (BSc) from the University of Chile and an MPA in Digital Technologies and Policy at UCL Department of Science, Technology, Engineering and Public Policy (STEaPP).