Finance Act 2000

Entitlement to R&D tax relief E+W+S+N.I.

1 (1) A company is entitled to R&D tax relief for an accounting period if— E+W+S+N.I.

(a) the company qualifies as a small or medium-sized enterprise in the period (see paragraph 2), and

(b) [F1 the aggregate of its qualifying R&D expenditure (see paragraph 3) and its qualifying sub-contracted R&D expenditure (within the meaning of paragraph 8 of Schedule 12 to the Finance Act 2002) deductible in that period is not less than]—

(i) £25,000, if the accounting period is a period of 12 months, or

(ii) such amount as bears to £25,000 the same proportion as the accounting period bears to 12 months.

(2) For the purposes of sub-paragraph (1) a company’s qualifying R&D expenditure is deductible in an accounting period if—

(a) it is allowable as a deduction in computing for tax purposes the profits for that 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.

(3) For the purposes of sub-paragraph (2)(a) no account shall be taken of section 401 of the Taxes Act 1988 (pre-trading expenditure treated as incurred when trading begins).

[F2 (3A) For the purposes of sub-paragraph (1)(b) a company’s qualifying sub-contracted R&D expenditure (within the meaning of paragraph 8 of Schedule 12 to the Finance Act 2002) is deductible in an accounting period if it is allowable as a deduction in computing for tax purposes the profits for that period of a trade carried on by the company.]

(4) In relation to an accounting period beginning before and ending on or after 1st April 2000, the references in sub-paragraph (1)(b)(i) and (ii) to the accounting period shall be read as references to so much of it as falls on or after that date.

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Amendments (Textual)

F1 Words in Sch. 20 para. 1(1)(b) substituted (24.7.2002 with effect as mentioned in s. 56 of the amending Act) by 2002 c. 23, s. 56, Sch. 15 para. 2(1)(a) (with Sch. 15 para. 1(2))

F2 Sch. 20 para. 1(3A) inserted (24.7.2002 with effect as mentioned in s. 56 of the amending Act) by 2002 c. 23, s. 56, Sch. 15 para. 2(1)(b) (with Sch. 15 para. 2(2))