Spring Statement 2022


Capital Allowances and R&D updates in the 2022 Spring Statement

Capital Allowances

In order to support businesses to invest and grow, the temporary £1 million level of the Annual
Investment Allowance has been extended to 31 March 2023.

This is the highest level of support for capital expenditure ever provided through the Annual Investment Allowance and provides generous relief for investment across over a million SMEs.

R&D Tax Relief

The government set out in the Tax Administration and Maintenance Command Paper that R&D tax reliefs would be reformed to include some cloud and data costs and refocus support on R&D carried out in the UK.

The government has listened to stakeholders and can confirm that from April 2023, all cloud computing costs associated with R&D, including storage, will qualify for relief.

The government remains committed to refocus support towards innovation in the UK, ensuring that the UK more effectively captures the benefits of R&D funded by the reliefs.

The government recognises that there are some cases where it is necessary for the R&D to take place overseas.

The government will, therefore, legislate so that expenditure on overseas R&D activities can still qualify where there are:
• material factors such as geography, environment, population or other conditions that are
not present in the UK and are required for the research – for example, deep ocean research
• regulatory or other legal requirements that activities must take place outside of the UK – for
example, clinical trials

To support the growing volume of R&D underpinned by mathematical advances, the definition
of R&D for tax reliefs will be expanded by clarifying that pure mathematics is a qualifying cost.

Where required, legislation will be published in draft before being included in a future Finance
Bill to come into effect in April 2023.