Corporation Tax Act 2009 (c. 4)

Part 13 U.K. Additional relief for expenditure on research and development

Chapter 2 U.K. Relief for SMEs: cost of R&D incurred by SME

Threshold U.K.

1050 R&D threshold U.K.

(1) For the purposes of this Chapter a company meets the R&D threshold in an accounting period if its total qualifying R&D expenditure for the period is at least—

(a) £10,000, if the accounting period is a period of 12 months, or

(b) the amount given by subsection (2), if the accounting period is a period of less than 12 months.

(2) The amount referred to in subsection (1)(b) is—

where X is the number of days in the accounting period.

(3) A company's “total qualifying R&D expenditure” for an accounting period is the sum of—

(a) its qualifying Chapter 2 expenditure (see section 1051),

(b) its qualifying Chapter 3 expenditure (see section 1065), and

(c) its qualifying Chapter 4 expenditure (see section 1070),

that is deductible in the period.

(4) Subsections (5) to (7) apply for the purpose of determining whether expenditure is deductible in an accounting period.

(5) A company's qualifying Chapter 2 expenditure is deductible in an accounting period if—

(a) it is allowable as a deduction in calculating for corporation tax purposes the profits for the period of a trade carried on by the company, or

(b) it would have been allowable as such a deduction had the company, at the time the expenditure was incurred, been carrying on a trade consisting of the activities in respect of which it was incurred.

(6) For the purposes of subsection (5)(a), section 61 (pre-trading expenses treated as incurred when trading begins) is to be ignored.

(7) Each of the following—

(a) a company's qualifying Chapter 3 expenditure, and

(b) a company's qualifying Chapter 4 expenditure,

is deductible in an accounting period if it is allowable as a deduction in calculating for corporation tax purposes the profits for the period of a trade carried on by the company.

(8) Expenditure allowable as a deduction for the purposes of subsection (7) includes expenditure so allowable because of section 61 (pre-trading expenses).