Page 4 - HMRC changes APR23

SPOTLIGHT – R&D TAX RELIEF CHANGES AND THE IMPACT ON YOU
01. Exclusion of overseas R&D spend
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how will it affect your business?
As of April 2024, expenditure on subcontracted R&D and the cost of EPWs employed on R&D projects outside the UK would no longer be eligible for UK R&D tax relief.
On the bright side, materials sourced overseas and costs related to data and cloud computing sourced overseas can still be claimed if these are an intrinsic part of R&D carried out in the UK.
There will be some circumstances when companies can’t conduct research within the UK, and as such, claimants will still be allowed to claim relief on R&D expenditure outside the UK. For example, in some instances, material factors such as geography, environment, population or other conditions that are not present in the UK but are indispensable to the research may dictate that a research project is carried out overseas.
While Treasury only recently postponed the implementation of this exclusion, it will affect many companies with overseas R&D teams.