The following Corporation Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
Research & development (R&D) tax relief is only available for expenditure which meets certain conditions and that falls within certain types of qualifying expenditure. The conditions and types of expenditure are similar for both SME R&D relief and large company R&D relief with some exceptions which are detailed below.
See also the Research and development expenditure (B) video, which provides more information on qualifying costs and record keeping requirements, together with some worked examples.
On 21 July 2020, the Government launched a consultation document inviting views on whether to expand the scope of qualifying expenditure to include data and cloud computing costs to better reflect current R&D practices. The consultation closed on 13 October 2020 and a summary of responses is set to be published.
Certain conditions have to be met in relation to the expenditure, it must be:
revenue not capital in nature, although capital allowance may be available, see the Business premises renovation allowances guidance note
related to a trade carried on or to be carried on by the company, the relief is a corporation tax relief and so is not available to unincorporated businesses
allowable as a deduction in calculating the profits of the trade for the purposes of corporation tax
Not all expenditure which meets the qualifying conditions is available for R&D tax relief, the expenditure must also fall within certain qualifying categories which are detailed below:
consumable or transformable items
relevant payments to the subjects of clinical trials
subcontracted out R&D costs (but for large companies this is restricted ― see below)
cost of R&D work subcontracted to the company (this is restricted for both SMEs and large companies, see below)
externally provided workers
for large company R&D relief only, contributions to independent research
Further detail on these expenditure types is set out below.
Relief under the SME
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
Why capital losses are importantCapital losses are usually set against the capital gains that arise in the same year as the loss, reducing the total taxable gains for that year. Losses not used in this fashion are normally carried forward to be set against the next available gains.However, in
Why is this important?In order to get a full basic state pension, an individual must have paid sufficient national insurance contributions (NIC) for a minimum number of qualifying years in their working life. As NIC cannot be paid in the tax year before the individual reaches the age of 16, or in a
The transactions in securities (TiS) legislation is anti-avoidance legislation aimed at situations where close company shareholders have engineered a disposal of shares to obtain a beneficial capital gains tax (CGT) rate, ie avoid income tax, on specified transactions.The targeted anti-avoidance
Tax professionals will often be asked to provide input into the financial statement work undertaken by audit professionals. This guidance note is intended to give an overview of some of the key issues when undertaking audit work.This note is an introduction only and is written on the assumption that