(1)This Part provides for corporation tax relief for expenditure on research and development.
(2)Relief under this Part is in addition to any deduction given under section 87 for the expenditure.
(3)Relief under [F1Chapter 2] is available to a company which is a small or medium-sized enterprise, in particular—
(a)Chapter 2 provides for relief where the cost of in-house direct research and development or contracted out research and development is incurred by the company,
F2(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F2(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F3(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5)Chapter 6 contains further provision in relation to relief under [F4Chapter 2] , in particular—
(a)section 1081 provides for certain insurance companies to be treated as large companies,
F5(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F5(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(d)section 1084 contains an anti-avoidance provision dealing with artificially inflated claims for relief or R&D tax credits (as to which, see subsection (7) below).
(6)Relief under Chapter 7 is available to [F6large companies] where expenditure is incurred on vaccine or medicine research.
(7)[F7Chapter 2 also provides] for the payment of tax credits (“R&D tax credits”) where a company which is a small or medium-sized enterprise—
(a)obtains relief under Chapter 2 F8..., and
(b)makes, or is treated as making, a trading loss.
(8)Chapter 8 contains provision limiting the amount of relief available under Chapter 2 or 7 in relation to expenditure on a particular research and development project.
(9)Chapter 9 contains supplementary provision, including definitions.
(10)For information about the procedure for making claims under this Part see Schedule 18 to FA 1998, in particular Part 9A of that Schedule (claims for R&D tax reliefs).
Textual Amendments
F1Words in s. 1039(3) substituted (with effect in accordance with Sch. 15 paras. 28, 29 of the amending Act) by Finance Act 2013 (c. 29), Sch. 15 para. 13(2)(a)
F2S. 1039(3)(b)(c) omitted (with effect in accordance with Sch. 15 paras. 28, 29 of the amending Act) by virtue of Finance Act 2013 (c. 29), Sch. 15 para. 13(2)(b)
F3S. 1039(4) omitted (with effect in accordance with Sch. 15 paras. 28, 29 of the amending Act) by virtue of Finance Act 2013 (c. 29), Sch. 15 para. 13(3)
F4Words in s. 1039(5) substituted (with effect in accordance with Sch. 15 paras. 28, 29 of the amending Act) by Finance Act 2013 (c. 29), Sch. 15 para. 13(4)(a)
F5S. 1039(5)(b)(c) omitted (with effect in accordance with Sch. 15 paras. 28, 29 of the amending Act) by virtue of Finance Act 2013 (c. 29), Sch. 15 para. 13(4)(b)
F6Words in s. 1039(6) substituted (with effect in accordance with Sch. 3 para. 38 of the amending Act) by Finance Act 2012 (c. 14), Sch. 3 para. 16(2)
F7Words in s. 1039(7) substituted (with effect in accordance with Sch. 3 para. 38 of the amending Act) by Finance Act 2012 (c. 14), Sch. 3 para. 16(3)(a)
F8Words in s. 1039(7)(a) omitted (with effect in accordance with Sch. 3 para. 38 of the amending Act) by virtue of Finance Act 2012 (c. 14), Sch. 3 para. 16(3)(b)
Expenditure may be eligible for relief under more than one Chapter of this Part.
(1)For provision enabling a company carrying on a trade to make a claim for an amount in respect of expenditure on research and development (an “R&D expenditure credit”) to be brought into account as a receipt in calculating the profits of the trade for an accounting period, see Chapter 6A of Part 3.
(2)For provision prohibiting a company from making a claim for an R&D expenditure credit and for relief under this Part in respect of the same expenditure, see section 104B.]
Textual Amendments
F9S. 1040A inserted (with effect in accordance with Sch. 15 para. 27 of the amending Act) by Finance Act 2013 (c. 29), Sch. 15 para. 2(2)
In this Part “research and development” has the meaning given by [F10section 1138 of CTA 2010].
Textual Amendments
F10Words in s. 1041 substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 666 (with Sch. 2)
(1)In this Part “relevant research and development”, in relation to a company, means research and development—
(a)related to a trade carried on by the company, or
(b)from which it is intended that a trade to be carried on by the company will be derived.
(2)Research and development related to a trade carried on by a company includes—
(a)research and development which may lead to or facilitate an extension of the trade, and
(b)research and development of a medical nature which has a special relation to the welfare of workers employed in the trade.
(3)But any reference to “relevant research and development” which applies for the purposes of Chapter 7 (relief for F11... large companies: vaccine research etc) is to be read as if subsection (2)(b) were omitted.
Textual Amendments
F11Words in s. 1042(3) omitted (with effect in accordance with Sch. 3 para. 38 of the amending Act) by virtue of Finance Act 2012 (c. 14), Sch. 3 para. 17