Definition
Data and cloud costs are a qualifying R&D expenditure category introduced by Finance Act 2022 for accounting periods beginning on or after 1 April 2023. The category covers the cost of licensing datasets used directly in qualifying R&D and the cost of cloud computing services, including data storage, data processing, hardware-as-a-service, and software-as-a-service platform access, where used for qualifying activity. Costs must be apportioned to the R&D use where the same data or cloud resource is also used for non-R&D purposes.
How HMRC defines it
HMRC guidance is at CIRD82500 of the CIRD Manual, which details the scope and apportionment requirements. The legislation is at section 1125A of the Corporation Tax Act 2009. Note that where data is licensed and then sublicensed or resold, or used for staff training outside the qualifying project, that portion is excluded.
Practical example
An AI company spends £80,000 on AWS compute and £20,000 on a licensed training dataset directly used to train a novel machine-learning model that forms the core of a qualifying R&D project. With appropriate apportionment evidence showing the AWS usage was 85% R&D, the claim includes £68,000 of cloud costs and the full £20,000 of data costs.