5(1)In Part IV (provisions relating to the Schedule D charge), after section 82 insert—U.K.
“82A Expenditure on research and development.
(1)Notwithstanding anything in section 74, where a person carrying on a trade incurs expenditure not of a capital nature on research and development—
(a)related to that trade, and
(b)directly undertaken by him or on his behalf,
the expenditure incurred may be deducted as an expense in computing the profits of the trade for the purposes of tax.
(2)For this purpose expenditure on research and development does not include expenditure incurred in the acquisition of rights in, or arising out of, research and development.
Subject to that, it includes all expenditure incurred in carrying out, or providing facilities for carrying out, research and development.
(3)The reference in subsection (1) above to research and development related to a trade includes—
(a)research and development which may lead to or facilitate an extension of that trade;
(b)research and development of a medical nature which has a special relation to the welfare of workers employed in that trade.
(4)The same expenditure may not be taken into account under this section in relation to more than one trade.
(5)In this section “research and development” has the meaning given by section 837A and includes oil and gas exploration and appraisal.
82B Payments to research associations, universities etc.
(1)Notwithstanding anything in section 74, where a person carrying on a trade—
(a)pays any sum to a scientific research association that—
(i)has as its object the undertaking of scientific research related to the class of trade to which the trade he is carrying on belongs, and
(ii)is for the time being approved for the purposes of this section by the Secretary of State, or
(b)pays any sum to be used for such scientific research as is mentioned in paragraph (a) above to any such university, college research institute or other similar institution as is for the time being approved for the purposes of this section by the Secretary of State,
the sum paid may be deducted as an expense in computing the profits of the trade for the purposes of tax.
(2)In this section “scientific research” means any activities in the fields of natural or applied science for the extension of knowledge.
(3)The reference in this section to scientific research related to a class of trade includes—
(a)scientific research which may lead to or facilitate an extension of trades of that class;
(b)scientific research of a medical nature which has a special relation to the welfare of workers employed in trades of that class.
(4)If a question arises under this section whether, or to what extent, any activities constitute or constituted scientific research, the Board shall refer the question for decision to the Secretary of State.
The decision of the Secretary of State is final.
(5)The same expenditure may not be taken into account under this section in relation to more than one trade.”.
(2)Any approval given by the Secretary of State for the purposes of section 136(b) or (c) of the M1Capital Allowances Act 1990 and in force immediately before the commencement of this paragraph has effect as if given under section 82B(1)(a) or (b) of the Taxes Act 1988 as inserted by sub-paragraph (1) above.
(3)So far as is necessary for continuing its effect, any decision made by the Secretary of State under section 139(3) of the M2Capital Allowances Act 1990 before the commencement of this paragraph has effect as if given under section 82B(4) of the Taxes Act 1988 as inserted by sub-paragraph (1) above.