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Capital Allowances Act 2001

Chapter 1: Introduction

1512.This Chapter introduces R&D allowances. They are given to traders who incur qualifying expenditure. Chapter 2 defines “qualifying expenditure” and contains the condition that the person must be a trader.

1513.Section 437 requires qualifying expenditure on R&D in order for allowances to be given and defines “research and development”.

1514.Section 438 gives the meaning of “expenditure on research and development”. That meaning excludes, with minor exceptions, expenditure on dwellings.

Section 437: Research and development allowances

1515.This section is based on section 139(1)(a) of CAA 1990.

1516.Subsection (1) provides that qualifying expenditure on R&D is needed before allowances can be made.

1517.Subsection (2) gives the extended meaning of “research and development” in this Part to include oil and gas exploration and appraisal.

Section 438: Expenditure on research and development

1518.This section is based on sections 137(3) and 139(1)(c) of CAA 1990. It sets out what is included and excluded from being expenditure on R&D and also permits just and reasonable apportionments of expenditure.

1519.Subsection (4) is more explicit than section 137(3) of CAA 1990, in that it only permits certain expenditure on a dwelling to be treated as on R&D. See Note 53 in Annex 2.

1520.Subsection (5) requires any apportionment to be “just and reasonable”. This is a change, see Change 40 in Annex 1.

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