The HM Treasury outlined new provisions of the United Kingdom’s research and development (R&D) tax relief system in their December 2021 report, with emphasis on providing more tax incentives for investments and innovation undertaken in the United Kingdom. Draft legislation is expected by the end of the summer.

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. Currently, there is no requirement that R&D activity must be conducted within the UK to be eligible for tax reliefs.

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.