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.
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 alsofall 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 R&D scheme is not available where the expenditure is:
incurred in the carrying on of activities which are contracted out to the company by any person
**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.
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