UK Budget: Cloud tax relief, compute study in historic cost of living crisis

SMEs' software spending subsidy continues

As the UK's Chancellor of the Exchequer struggles to bring cheer to the nation's greatest cost of living crisis in 50 years, he let slip a few nuggets for the tech industry.

Firstly, if an organization qualifies for research and development tax relief, the services which qualify are being expanded to include cloud services and data analytics.

During his Budget speech this week, chancellor Rishi Sunak said: "We'll reform R&D tax credits so that they're effective and better value for money. We'll expand the generosity of the reliefs to include data, cloud computing, and pure maths."

Under the Tax Administration and Maintenance Command Paper, R&D tax reliefs are set to be reformed to include some cloud and data costs and refocus support on R&D carried out in the UK, the Spring Statement said [PDF].

"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. This will allow companies to claim for costs related to the storage of vital data, supporting data-heavy research such as genomic sequencing," the statement said.

The statement also promises a government review into the Future of Compute, "building on a range of compute work across government and in particular the Government Office for Science report on Large Scale Computing."

"In the past decade, compute has grown as a critical general-purpose technology for productivity, prosperity, and innovation, making it essential to review our compute needs over the next decade. Led by an external expert, the review will provide recommendations to form the basis of a long-term plan for the government's approach to compute," the statement said.

Meanwhile, the Treasury continued plans to help businesses with between five and 249 employees invest in software. The Help to Grow (Digital) scheme announced last year promised eligible SMEs a 50 per cent discount on approved software worth up to £5,000.

At its launch, in the Spring Statement 2021, the scheme set out to help up to 100,000 businesses, but the Treasury did not reveal which software vendors would be included.

According to documents released with the 2021 Budget, the UK has relatively low adoption of digital technologies and software compared to international competitors, while UK SMEs are less likely to use formal management practices than SMEs in peer countries.

Despite claiming to help 100,000 companies with up to £5,000 software discounts each when it was launched [PDF], Help to Grow: digital was expected to spend £50m in 2021/22, £115m in 2022/23 and £130m.

The Treasury has not revealed how vendors were selected for the scheme. So far, the scheme includes Deskpro, Gold-vision, ZymPro, Capsule CRM, Swiftcase, Zymplify, Quickbooks (Intuit), Crunch.Premium, and Sage.

The Treasury has yet to respond to The Register's request for comment. ®

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