UK: Possible expansion of R&D tax credits to include data, cloud computing costs

UK: Possible expansion of R&D tax credits

HM Treasury issued a consultation concerning whether to expand the range of qualifying expenditure for research and development (R&D) tax credits to include data and cloud computing costs.


HM Treasury in issuing the consultation on the scope of qualifying expenditures for R&D tax incentives invited comments as to whether to expand the range of qualifying expenditure to include data and cloud computing costs to better reflect modern R&D practices. Businesses have been asked to comment on how they use data in R&D activity, and what costs are incurred in the use of the cloud in R&D. The consultation document (21 July 2020) makes it clear that any expansion of the R&D rules needs also to take into account when other cost savings could be made, and to demonstrate that this will meet the policy objective of encouraging reinvestment of funds in R&D.

HM Treasury is therefore asking for those that desire an extension of the scope of costs that qualify, to identify areas that are currently eligible for tax credits to be restricted or limited and, specifically, has asked for views on whether qualifying indirect activities (such as, administrative and clerical support for R&D) and routine activities need to be limited or restricted.

The consultation document focuses on the important role R&D plays in a modern economy, but also highlights the importance of determining that the R&D tax credits regime is more reflective of modern R&D practices and delivers the policy intent of driving greater reinvestment of funds into R&D. Modern business relies increasingly on accessing cloud based services.

Read a July 2020 report prepared by the KPMG member firm in the UK

© 2022 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

For more detail about the structure of the KPMG global organization please visit

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us


Want to do business with KPMG?


loading image Request for proposal