R&D capital allowances
Produced in partnership with Anne Fairpo

The following Tax practice note produced in partnership with Anne Fairpo provides comprehensive and up to date legal information covering:

  • R&D capital allowances
  • What is R&D?
  • Qualifying capital expenditure on R&D
  • Expenditure on R&D—types of asset
  • Land and buildings
  • Details of R&D allowances
  • When must R&D allowances be claimed?
  • Disposal events
  • Quick disposals
  • Balancing charges
  • More...

R&D capital allowances

FORTHCOMING CHANGE: At Spring Budget 2021, the government announced a wide-ranging review of research and development (R&D) reliefs, beginning with a consultation exploring the nature of current private-sector R&D investment and the impact of existing R&D relief schemes. See Practice Note: Tax—consultation and legislation tracker.

Research and development (R&D) capital allowances are available to all taxpayers carrying on a trade, not just companies. Therefore, an individual, or partnership of individuals, which cannot claim R&D tax relief, can still claim R&D capital allowances.

Where an item of expenditure could qualify for other capital allowances (such as plant and machinery allowances), the trader needs to choose which allowance to take. Only one form of capital allowances may be claimed on an item of capital expenditure.

Following the Finance Act 2014, R&D allowances are no longer affected by any restrictions imposed on a company under CTA 2010, Pt 14A following certain changes of company ownership (for a description of these rules, see Practice Note: Restrictions on the use of losses following company takeover—the deduction transfer TAAR).

What is R&D?

R&D that qualifies for R&D tax relief (for which, see Practice Note: What is R&D?) will also be R&D for capital allowances purposes.

Oil and gas exploration appraisal also falls within the capital allowances definition of R&D.

Qualifying capital expenditure on R&D

Expenditure qualifies for R&D capital allowances if it is capital expenditure incurred

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