27 Oct 2021

Cloud Computing and Data costs to be covered under expanded R&D tax credit

The Chancellor has acted on long standing ask from techUK and our members to expand the coverage of the R&D tax credit in the Autumn Budget and Spending Review.

In the Autumn Budget 2021, the Chancellor announced that R&D tax reliefs will be reformed to support modern research methods by expanding qualifying expenditure to include data and cloud computing costs.

techUK welcomed this announcement which we and our members have been advocating since 2017 for expanding the scope of qualifying expenditures to cover key intangible assets, with a specific ask to include data, data analytics and cloud computing. This means that companies can finally use the UK’s R&D support system to cover data driven research, which is good for science, product development and productivity.

This expansion better aligns the UK’s R&D system with the way companies use technology to transform their businesses in the modern world. During 2020, the adoption of cloud computing services increased in the UK, driven largely by the impact of the COVID-19 pandemic. Evidence show that 51% of UK business leaders believe investment in cloud computing “saved” their organisations during the pandemic, and 60% of respondents planned to increase and scale their cloud usage in 2021.

In techUK’s submission to the Autumn Budget and Spending Review 2021 we and our members called for an extension of the R&D tax credit arguing this would enable businesses to invest more in R&D and to modernize the UK’s R&D tax credit which, over the had begun to fall behind changes in the economy as well as competitor regimes abroad.

Welcoming the announcement techUK CEO Julian David said:

“The Chancellor’s plan to reform the R&D tax credit system to allow businesses to better utilise data and cloud computing services is a major upgrade to the UK’s support for research and development, marking a major step toward boosting UK productivity.

“At techUK we have been calling for the extension of tax reliefs to cover cloud computing and data costs for some time. The new regime recognise the way companies use technology to transform their businesses in the modern world. In particular we can see that smaller businesses that use cloud computing and data-driven technologies have increased their annual turnovers in excess of £250,000."

techUK’s comprehensive Budget and Spending Review submission is available here. Read a summary of our submission by clicking here.

Julian David

CEO, techUK

Julian David is the CEO of techUK, the leading technology trade association that aims to realise the positive outcomes that digital technology can achieve for people, society, the economy and the planet.

Julian led the transformation of techUK from its predecessor Intellect in 2014, putting an increased focus on the growth and jobs the technology industry offers in a global economy. He has since led its impressive expansion driving forward the tech agenda in key areas such as skills, innovation, business success and public sector transformation. He leads techUK’s 90-strong team representing a thousand British based tech companies, comprising global and national champions and 600 SMEs. In 2020, techUK joined forces with TechSkills, the employer-led organisation that aims to improve the flow of talent into the digital workforce and open up access for all to high value tech jobs.

Julian represents techUK on a number of external bodies including the Digital Economy Council, the National Cyber Security Advisory Council and the Department of Business and Trade’s Strategic Trade Advisory Group. He is member of the NTA Advisory Board of DIGITALEUROPE and is a member of the Board of the Health Innovation Network the South London Academic Health Science Network.

Julian has over thirty years of experience in the technology industry. Prior to joining techUK, he had a series of leadership roles at IBM including Vice President for Small and Medium Business and Public Sector. After leaving IBM he worked as a consultant helping tech SMEs establish successful operations in the U.K. His personal interests include Football (West Ham, Balham FC and Real Madrid) and Art.

Email:: [email protected]
Twitter:: @techUKCEO

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Neil Ross

Associate Director, Policy, techUK

As Associate Director for Policy Neil leads on techUK's public policy work in the UK. In this role he regularly engages with UK and Devolved Government Ministers, senior civil servants and members of the UK’s Parliaments aiming to make the UK the best place to start, scale and develop a tech business.

Neil joined techUK in 2019 to lead on techUK’s input into the UK-EU Brexit trade deal negotiations and economic policy. Alongside his role leading techUK's public policy work Neil also acts as a spokesperson for techUK often appearing in the media and providing evidence to a range of Parliamentary committees.

In 2023 Neil was listed by the Politico newspaper as one of the '20 people who matter in UK tech' and has regularly been cited as a key industry figure shaping UK tech policy.