The trade industry secretary Patricia Hewitt has published new guidelines on the definition of research and development for tax purposes.
The simplified guidelines aim to clear up the grey areas in the original definition to make the criteria easier to understand for business, and should come into force by April.
They also emphasise that R&D tax credits apply to development work just as much as research, and to new or improved processes as well as new products.
Hewitt said: “We want the UK to be a key hub in the global knowledge economy, and to achieve this we need companies that turn research and development into profit, jobs and growth. These new guidelines will make it simpler for businesses to interpret the tax credits and receive as much support as possible to carry out the R&D they do.”
The CBI has welcomed the changes. John Cridland, CBI deputy director general, said: “Government’s continued support for research and development is extremely welcome. The CBI has been pressing for simplification of the R&D tax credit for some time and is pleased with these changes.”