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<p>The Government recognises that pure mathematics research underpins wider R&D
expenditure. It is therefore right that expenditure on mathematical research should
be considered as qualifying expenditure for tax reliefs. This reform will support
sectors where the UK has a comparative advantage such as AI, quantum computing, and
robotics, while also supporting sectors such as manufacturing and design. The Government
believes this reform will have negligible effects on the public finances.</p><p> </p><p>There
has been a rise in claims for tax credits in recent years, but these have not doubled
in the period between 2018-19 and 2019-20. In 2019-20, 82,950 companies submitted
claims, of which 9,675 were for R&D expenditure credit (RDEC) and 76,225 were
for the small or medium-sized enterprise (SME) scheme. This compared to 71,760 claims
in the previous year, of which 8,725 were for RDEC and 65,480 were for the SME scheme.
Regional analysis into the location of where the R&D takes place does not exist,
as only the locations of companies’ registered offices are recorded.</p><p> </p><p>The
Government is currently undertaking a review of R&D tax reliefs, to ensure the
UK remains a competitive location for cutting edge research, that the reliefs continue
to be fit for purpose, and that taxpayer money is effectively targeted. The review
is also considering reasons for why the cost of support for both schemes has increased
substantially in recent years. As announced at Spring Statement 2022, the Government
will consider further reforms ahead of the Autumn.</p><p> </p>
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