This Practice Note is about the scope of qualifying expenditure for the purpose of the following two R&D relief schemes (which are subject to detailed commencement and transitional provisions): • the merged R&D expenditure credit (the merged RDEC) scheme applying for accounting periods beginning on or after 1 April 2024—see Practice Note: The merged R&D expenditure credit (post-1 April 2024), and • the enhanced relief for loss-making R&D-intensive SMEs (the ERIS) applying for accounting periods beginning on or after 1 April 2024—see Practice Note: Enhanced relief for R&D-intensive loss-making SMEs (post-1 April 2024); together these two schemes are referred to in this Practice Note as the post-1 April 2024 schemes It discusses the requirement that the expenditure must be revenue (and not capital) in nature, the specified categories of qualifying expenditure, the rules for contracted out R&D and the restrictions on relief for overseas expenditure. For information about the schemes of relief for R&D generally applying for accounting periods beginning before 1 April 2024, see Practice Notes: SME R&D relief—additional deduction (pre-1 April 2024),

This Practice Note about is about the scope of qualifying expenditure for the purpose of the following two R&D relief schemes (which are subject to detailed commencement and transitional provisions): • the research and development (R&D) relief scheme for small or medium-sized enterprises (SMEs) for accounting periods beginning before 1 April 2024, for more information, see Practice Notes: SME R&D relief—additional deduction (pre-1 April 2024) and SME R&D relief—tax credit (pre-1 April 2024), and • the R&D expenditure credit scheme that applies for accounting periods beginning before 1 April 2024, for more information, see Practice Note: R&D expenditure credit (pre-1 April 2024); together, these first two schemes are referred to in this Practice Note as the pre-1 April 2024 schemes For information about the schemes of relief for R&D generally applying for accounting periods beginning on or after 1 April 2024, see Practice Notes: The merged R&D expenditure credit (post-1 April 2024) and Enhanced relief for R&D-intensive loss-making SMEs (post-1 April 2024). For information about the scope of qualifying R&D expenditure for the purposes

Why use a QROPS? In practice, many Qualifying Recognised Overseas Pension Schemes (QROPSs) are personal pension schemes or retirement annuities that are marketed for non-UK residents. The main characteristic of a QROPS is that it is the only type of overseas arrangement into which a ‘recognised transfer’ can be made from a UK registered pension scheme. This limitation is embedded in the Finance Act 2004 (FA 2004) which defines, at s 169, a ‘recognised transfer’ as a transfer of sums or assets under a registered pension scheme to another registered pension scheme or a QROPS. For further information, see Practice Note: International pension transfers. The transfer and consolidation of pension benefits is a key motivation for using a QROPS over any other type of overseas pension schemes. Historically, QROPSs have been popular with UK expatriates because they are similar to a UK registered pension scheme, but without many of the investment constraints, regulatory requirements, currency risks and, until 6 April 2017, tax charges, applicable to such schemes. The advantageous UK tax

The qualifying asset holding company (QAHC) regime is an elective tax-privileged regime available to certain holding companies (referred to as ‘asset holding companies’ or ‘AHCs’) that are used in collective and institutional investment structures to hold investment assets. The QAHC regime took effect from 1 April 2022. It was a key initial workstream of the wider review of the UK funds regime carried out by the UK government, first announced at Spring Budget 2020. AHCs that qualify for the QAHC regime benefit from modified tax rules in respect of their qualifying investment business, which is ‘ring fenced’ from any other ancillary activities they carry on. They also benefit from modified tax rules in respect of certain payments that they make. This Practice Note describes how, and what happens when, an AHC enters and exits the QAHC regime. It also covers the rules around breaches of the QAHC eligibility conditions and information requirements. For more on what AHCs are and why they are used in fund structures, and for more on the eligibility

The qualifying asset holding company (QAHC) regime is an elective tax-privileged regime available to certain holding companies (referred to as ‘asset holding companies’ or ‘AHCs’) that are used in collective and institutional investment structures to hold investment assets. The QAHC tax regime took effect from 1 April 2022. It was a key initial workstream of the wider review of the UK funds regime, first announced by the UK government at Spring Budget 2020. AHCs that qualify for and enter the QAHC regime benefit from modified tax rules in respect of their qualifying investment business, which is ‘ring fenced’ from any other ancillary activities they carry on. They also benefit from modified tax rules in respect of certain payments that they make. The QAHC regime is not intended to affect the taxation of profits from any trading activities that might be undertaken by a QAHC (which will be outside the ring fence), nor will it affect the taxation of any non-qualifying investment activities that a QAHC undertakes (also outside the ring fence, such as investments

The qualifying asset holding company (QAHC) regime is an elective tax-privileged regime available to certain holding companies (referred to as ‘asset holding companies’ or ‘AHCs’) that are used in collective and institutional investment structures to hold investment assets. The main focus of the QAHC regime is on so-called ‘alternative fund structures’ (which the OECD describes as non-CIV funds). These are typically funds which: • are closed-ended • are non-retail funds, and • hold assets across a range of private market investment strategies—chiefly credit, private equity and real estate investments (ie more illiquid and higher risk assets) The QAHC tax-privileged regime was introduced on 1 April 2022 with the aim of encouraging funds to base their AHCs in the UK where that would otherwise make sense (eg where the investment manager is based in the UK). Traditionally, despite a high concentration of deal professionals and asset management expertise in the UK, Luxembourg has been the preferred location for asset holding companies in such fund structures, due to its broad treaty network and framework

This Practice Note explains the meaning of a qualifying charitable donation and how a company can deduct the qualifying charitable donations (QCDs) from its total profits in the period in which the donation was made. This note also explains the concept of an excess management expense (being one that cannot be deducted from current period total profits because there are insufficient profits). Relief for qualifying charitable donations If a company makes a QCD in an accounting period, it can deduct the amount of that QCD from its ‘total profits’ for the purpose of calculating its corporation tax liability. The relief is automatic; it does not need to be claimed. For more guidance on the meaning of total profits and the calculation of corporation tax, see Practice Note: Basis of calculation of corporation tax. QCDs are deducted from a company’s total profits after a deduction has been made for any other reliefs and losses (other than group relief and group relief for carried-forward losses). This means that a deduction in respect of, for example, current

For the purposes of corporation tax, 'qualifying corporate bond' means any asset representing a loan relationship of a company (for purposes other than those of corporation tax references to a qualifying corporate bond is to be construed in accordance with the provisions of the Taxation of Chargeable Gains Act 1992 (TCGA 1992), ss 117, 117(1).

Debt securities which are exempt from tax on chargeable gains. Disposing of a QCB accordingly gives rise to no chargeable gain or allowable loss for the purposes of capital gains tax, with one exception, namely where: (i) there is a share disposal that would otherwise have given rise to a chargeable gain, and (ii) QCBs were issued as consideration for those shares and the existing chargeable gain is held over, disposal of the QCB will crystallise the chargeable gain.

The minimum level of earnings on which a person must have paid, been treated as having paid or been credited with National Insurance contributions in a tax year in order to make it a qualifying year for basic state pension.

A floating charge is a QFC under Insolvency Act 1986, Sch B1, para 14 if created by an instrument, which: (a) states that this paragraph applies to the floating charge; (b) purports to empower the holder of the floating charge to appoint an administrator of the company; (c) purports to empower the holder of the floating charge to make an appointment, which would be the appointment of an administrative receiver under IA 1986, s 29(2), or (d) purports to empower the holder of a floating charge in Scotland to appoint a receiver who, on appointment, would be an administrative receiver.

A lender holding one or more debentures of the company secured (a) by a qualifying floating charge, which relates to the whole or substantially the whole of the company's property, (b) by a number of qualifying floating charges, which together relate to the whole or substantially the whole of the company's property, or (c) by charges and other forms of security, which together relate to the whole or substantially the whole of the company's property and at least one of which is a qualifying floating charge (Insolvency Act 1986, Sch B1, para 14).