The scope of qualifying expenditures for research and development (R&D) tax credits
Executive summary
AAT welcomes this consultation on the scope of qualifying expenditure for R&D especially because the last such consultation was almost a decade ago. Much has changed in the British and global economy since 2010. R&D tax credits must be optimised while continuing to deliver good value for money for the taxpayer.
AAT believes that in a modern, dynamic economy with a strong commitment to R&D investment, all software costs should be recoverable for R&D and that all costs associated with the generation, processing or analysing of datasets should also be recoverable.
AAT notes the government objective of reaching R&D investment equating to 2.4% of GDP by 2027 but believes a more ambitious target should be set of ensuring the UK is in the top ten countries for R&D spend by 2027. The 2.4% target is well below what leading countries are currently investing: South Korea (4.3%), Japan (3.4%), Finland (3.2%), Switzerland (3.2%), Austria (3.1%), Sweden (3.1%), Denmark (2.9%), Germany (2.9%) USA (2.7%).
Related consultation responses
Research and development (R&D) tax reliefs: consultation on a single scheme
We agree that a single scheme would be beneficial. However, it should not neglect the need to provide a targeted higher rate relief to small businesses.
Tax reliefs inquiry
We believe there's room to reform major relief expenditures. We also recommend halving the headline rate of Inheritance Tax and reforming pension tax relief.
Property income review: call for evidence
While we appreciate that a single tax regime for all types of lettings would be simpler, it seems reasonable that different tax regimes should apply to each.
