We live in interesting times with both Brexit and now the Coronavirus creating uncertainty for business.
But ignoring those broad issues and purely looking at the R&D related measures in the 2020 Budget the key highlights are:
- Continued commitment to R&D investment and the two R&D schemes for Large Companies and SMEs. This is viewed as key part of Government strategy. This lines up with the Conservative manifesto.
- RDEC rates for Large Company R&D claims have been increased from 12% to 13% from 1st April 2020. This was in the Conservative manifesto.
- Consultation on R&D qualifying costs to potentially include the cost of buying data and the cost of cloud computing. These have been costs many in the software industry believe should be claimable but at present are not as they are not included in the CTA2009 as being claimable. Again, this was in the Conservative manifesto.
- The proposed anti abuse cap on payable SME R&D Tax Credits of 3 times a company PAYE and NIC contributions will not be introduced from 1st April 2020 as announced in the 2018 Budget but is delayed until 1st April 2021. This is because due to events, like the election and Brexit, the consultation has not been completed. We contributed to the consultation and hope the proposed measure will be adapted to avoid harming small genuine claimants.
- We have also been informed through the HMRC R&D Committee that changes will be made to externally provided worker legislation as part of the Budget Corporation Tax Act to amend Part 13 of CTA 2009. Externally provided workers are a catchy area of the legislation for the uninformed & it will be interesting to see the exact changes proposed. These changes are not found in the budget text below.
In terms of R&D claims the budget contained no big surprises. This is welcome. It is also a positive that that the Conservatives have treated R&D tax incentives in the way they outlined in their manifesto. The delay of the cap makes sense as it would be impossible to inform everyone effected and have them plan accordingly even if the consultation was completed today with just about three weeks’ notice to implementation.
The conservative record of supporting the R&D schemes continues and as someone who has seen how this has benefited hundreds of businesses, I commend them for this.
Full budget details can be found here https://www.gov.uk/government/publications/budget-2020-documents/budget-2020