The HM Treasury has outlined possible new provisions of the United Kingdom’s research and development (R&D) tax relief system, with emphasis on increasing tax incentives for investments and innovation undertaken in the United Kingdom. Currently, there is no requirement that R&D activity must be conducted within the UK to be eligible for tax reliefs, so valuers don’t need to account for different rates in their cash-flow projects.
Because of labour, regulation, and skill shortages, certain research activities in the life sciences, and software and data licencing sectors, will still receive full credit.
All R&D tax reliefs claims must be endorsed: The December report also attempts to curtail abuse by requiring greater detail for all claims, as well as digital endorsement by a named senior executive of each company. This requirement could add costs (and reduce value) for startups and SMEs.
Draft legislation is expected by the end of the summer, as the chancellor of the exchequer moves beyond the implementation of the OECD’s October 2021 global minimum tax rate proposals.
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