Following a consultation in 2020, the government is reforming R&D tax reliefs to support modern research methods by expanding qualifying expenditure to include data and cloud costs, to more effectively capture the benefits of R&D funded by the reliefs through refocusing support towards innovation in the UK, and to target abuse and improve compliance. 

These changes will be legislated for in Finance Bill 2022-23 and take effect from April 2023. Further details of these changes and next steps for the review will be set out in due course.

According to the responses to the consultation, the cloud services can be broadly split into: 

• Infrastructure as a service (IaaS) – user accesses instant computing infrastructure, hosted on the cloud, managed over the Internet (eg AWS, Google Cloud Platform, Microsoft Azure) 
• Platform as a service (PaaS) – user manages a software application running on the platform 
• Software as a service (SaaS) – users access third-party software, provided through a cloud service provider’s hosted infrastructure.