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

Qualifying expenditure U.K.

1051 Qualifying Chapter 2 expenditure U.K.

For the purposes of this Part a company's “qualifying Chapter 2 expenditure” means—

(a) its qualifying expenditure on in-house direct research and development (see section 1052), and

(b) its qualifying expenditure on contracted out research and development (see section 1053).

1052 Qualifying expenditure on in-house direct R&D U.K.

(1) A company's “qualifying expenditure on in-house direct research and development” means expenditure incurred by it in relation to which each of [F1 conditions A, B, D and E] is met.

(2) Condition A is that the expenditure is—

(a) incurred on staffing costs (see section 1123),

(b) incurred on software [F2 , data licences, cloud computing services] or consumable items (see section 1125),

(c) qualifying expenditure on externally provided workers (see section 1127), or

(d) incurred on relevant payments to the subjects of a clinical trial (see section 1140).

(3) Condition B is that the expenditure is attributable to relevant research and development undertaken by the company itself.

F3 (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) Condition D is that the expenditure is not incurred by the company in carrying on activities which are contracted out to the company by any person.

(6) Condition E is that the expenditure is not subsidised (see section 1138).

(7) See sections 1124, 1126 [F4 to 1126B] and 1132 for provision about when expenditure within subsection (2)(a), (b) or (c) is attributable to relevant research and development.

Textual Amendments

F1 Words in s. 1052(1) substituted (with effect in accordance with s. 13(8) of the amending Act) by Finance (No. 3) Act 2010 (c. 33), s. 13(2)(a)

F2 Words in s. 1057(2)(b) inserted (with effect in relation to accounting periods beginning on or after 1.4.2023) by Finance (No. 2) Act 2023 (c. 30), Sch. 1 paras. 6(a), 20

F3 S. 1052(4) omitted (with effect in accordance with s. 13(8) of the amending Act) by virtue of Finance (No. 3) Act 2010 (c. 33), s. 13(2)(b)

F4 Words in s. 1052(7) inserted (with effect in accordance with s. 28(7) of the amending Act) by Finance Act 2015 (c. 11), s. 28(4)(g)

1053 Qualifying expenditure on contracted out R&D U.K.

(1) A company's “qualifying expenditure on contracted out research and development” means expenditure—

(a) which is incurred by it in making the qualifying element of a sub-contractor payment (see sections 1134 to 1136), and

(b) in relation to which each of [F5 conditions A, C and D] is met.

(2) Condition A is that the expenditure is attributable to relevant research and development undertaken on behalf of the company.

F6 (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) Condition C is that the expenditure is not incurred by the company in carrying on activities which are contracted out to the company by any person.

(5) Condition D is that the expenditure is not subsidised (see section 1138).

(6) See sections 1124, 1126 [F7 to 1126B] and 1132 for provision about when particular kinds of expenditure are attributable to relevant research and development.

Textual Amendments

F5 Words in s. 1053(1)(b) substituted (with effect in accordance with s. 13(8) of the amending Act) by Finance (No. 3) Act 2010 (c. 33), s. 13(3)(a)

F6 S. 1053(3) omitted (with effect in accordance with s. 13(8) of the amending Act) by virtue of Finance (No. 3) Act 2010 (c. 33), s. 13(3)(b)

F7 Words in s. 1053(6) inserted (with effect in accordance with s. 28(7) of the amending Act) by Finance Act 2015 (c. 11), s. 28(4)(h)