Finance Act 2003 (c. 14)

SCHEDULES

SCHEDULE 31 U.K. Tax relief for expenditure on research and development

Part 3 U.K. Work sub-contracted to SMEs: Part 2 of Schedule 12 to Finance Act 2002

Introductory U.K.

11 U.K. Part 2 of Schedule 12 to the Finance Act 2002 (c. 23) (entitlement to relief for R&D expenditure: work sub-contracted to small or medium-sized enterprise) is amended in accordance with the following provisions of this Part of this Schedule.

Required minimum aggregate expenditure: reduction from £25,000 to £10,000 U.K.

12 (1) Paragraph 7 (entitlement to relief under Part 2 of the Schedule) is amended as follows. U.K.

(2) In sub-paragraph (1)(b) (requirement for minimum R&D expenditure of £25,000 or time apportioned part of that amount) in sub-paragraphs (i) and (ii) for “£25,000” substitute “ £10,000 ”.

Required minimum aggregate expenditure: inclusion of new class of expenditure U.K.

13 (1) Paragraph 7 is also amended as follows. U.K.

(2) In sub-paragraph (2) (meaning of “aggregate R&D expenditure”) omit the word “and” immediately preceding paragraph (b) and at the end of that paragraph add “, and

(c) its qualifying additional SME expenditure (see paragraph 10B).”.

R&D directly undertaken by SME: qualifying expenditure on externally provided workers U.K.

14 U.K. In paragraph 9 (expenditure on research and development directly undertaken by SME) for sub-paragraph (2) (the second condition, that the expenditure must be incurred on staffing costs or consumable stores) substitute—

“(2) The second condition is that the expenditure—

(a) is incurred on staffing costs,

(b) is incurred on consumable stores, or

(c) is qualifying expenditure on externally provided workers.”.