As announced at the Spring Statement 2022, pure mathematics will qualify as R&D for tax purposes from April 2023.
This necessitated an update to the government’s guidelines on the Meaning of research and development for tax purposes. Guideline 15 is split within the new guidelines, issued by the Department for Science, Innovation & Technology on 7 March 2023. This now states:
“15A. Science is the systematic study of the nature and behaviour of the physical and material universe. Work in the arts, humanities and social sciences, including economics, is not science for the purpose of these Guidelines.
15B. Mathematical techniques are frequently used in science. From April 2023 mathematical advances in themselves are treated as science for the purposes of these Guidelines, whether or not they are advances in representing the nature and behaviour of the physical and material universe.”
The 2010 version of the guidelines read:
“15. Science is the systematic study of the nature and behaviour of the physical and material universe. Work in the arts, humanities and social sciences, including economics, is not science for the purpose of these Guidelines. Mathematical techniques are frequently used in science, but mathematical advances in and of themselves are not science unless they are advances in representing the nature and behaviour of the physical and material universe.”
The first guideline has been updated to refer to the definition of R&D for tax purposes in s1006, Income Tax 2007, instead of the former s837A, Income and Corporation Taxes Act 1988. The specific reference to Statement of Standard Accounting Practice 13 (SSAP 13) has also been removed. SSAP 13 was superseded by FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland for accounting periods beginning on or after 1 January 2015.
The updated guidelines are given legislative effect by The Research and Development (Prescribed Activities) Regulations 2023, SI 2023/293. The 2023 guidelines apply for accounting periods beginning after 31 March 2023 for corporation tax, and for the tax year 2023/24 onwards for income tax and capital gains tax (eg, for the purposes of determining the taxable profits of an unincorporated trade).
Spring Budget 2023
On 15 March 2023, Chancellor Jeremy Hunt delivered the Spring Budget. Read ICAEW's analysis and reaction.
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