Part 3 U.K.Trading income

Modifications etc. (not altering text)

C1 Pt. 3 modified (1.1.2010) by Northern Rock plc (Tax Consequences) Regulations 2009 (S.I. 2009/3227), regs. 1, 4(1)

[F1 CHAPTER 6A U.K.Trade profits: R&D expenditure credits

Textual Amendments

F1 Pt. 3 Ch. 6A inserted (with effect in accordance with Sch. 15 para. 27 of the amending Act) by Finance Act 2013 (c. 29), Sch. 15 para. 1

Claims for credits U.K.

104A R&D expenditure credits U.K.

(1) A company carrying on a trade may make a claim for an amount (an “R&D expenditure credit”) to be brought into account as a receipt in calculating the profits of the trade for an accounting period.

(2) The company is entitled to an R&D expenditure credit for the accounting period if the company has qualifying R&D expenditure which is allowable as a deduction in calculating for corporation tax purposes the profits of the trade for the accounting period.

(3) In the case of a company that is a small or medium-sized enterprise in the accounting period, the company's “qualifying R&D expenditure” means—

(a) its qualifying expenditure on sub-contracted R&D (see section 104C),

(b) its subsidised qualifying expenditure (see section 104F), and

(c) its capped R&D expenditure (see section 104I).

(4) In the case of a company that is a large company throughout the accounting period, the company's “qualifying R&D expenditure” means—

(a) its qualifying expenditure on in-house direct research and development (see section 104J),

(b) its qualifying expenditure on contracted out research and development (see section 104K), and

(c) its qualifying expenditure on contributions to independent research and development (see section 104L).

(5) The amount of an R&D expenditure credit to which a company is entitled is determined in accordance with section 104M.

[F2 (5A)This section is subject to section 104AA.]

(6) Section 104N contains provision about the effect of a successful claim for an R&D expenditure credit.

(7) Sections 104U to 104W contain provision about insurance companies and group companies.

[F3 (7A) Section 104WA contains provision about ineligible companies.]

(8) Section 104X contains anti-avoidance provision.

(9) Section 104Y contains definitions.

(10) For information about the procedure for making claims under this Chapter, see Schedule 18 to FA 1998, in particular Part 9A of that Schedule.

Textual Amendments

F2 S. 104A(5A) 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. 1(2), 20

F3 S. 104A(7A) inserted (with effect in accordance with s. 31(5) of the amending Act) by Finance (No. 2) Act 2015 (c. 33), s. 31(2)

[F4 104AA Requirement to make a claim notification U.K.

(1) A company may not make a claim under section 104A(1) (an “RDEC claim”) after the end of the claim notification period unless—

(a) the company has made an R&D claim during the period of three years ending with the last day of the claim notification period,

(b) the company makes a claim notification in respect of the RDEC claim within the claim notification period, or

(c) the accounting period in respect of which the RDEC claim is made falls within the same period of account as another accounting period in respect of which the company has made an R&D claim or a claim notification.

(2) For the purposes of subsection (1)(a) ignore any R&D claim for an accounting period beginning before 1 April 2023 that is included in the company’s company tax return only by virtue of an amendment made on or after that date (see paragraph 83B(2) of Schedule 18 to FA 1998).]

Textual Amendments

F4 S. 104AA 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. 1(3), 20

104B Restriction on claiming relief under Part 13 and credit for same expenditure U.K.

A company may not make a claim for an R&D expenditure credit and for relief under Part 13 (additional relief for expenditure on research and development) in respect of the same expenditure.

[F5 104BARestriction on claiming other tax reliefs U.K.

(1) For provision prohibiting an R&D expenditure credit being given under this Chapter and relief being given under Chapter 3 of Part 15 (film tax relief), see section 1195(3A).

(2) For provision prohibiting an R&D expenditure credit being given under this Chapter and relief being given under Chapter 3 of Part 15A (television tax relief), see section 1216C(4).

(3) For provision prohibiting an R&D expenditure credit being given under this Chapter and relief being given under Chapter 3 of Part 15B (video games tax relief), see section 1217C(4).

[F6 (4) For provision prohibiting an R&D expenditure credit being given under this Chapter and relief being given under section 1217H or 1217K (theatrical productions: additional deduction or theatre tax credit), see section 1217JA(2).]

[F7 (5) For provision prohibiting an R&D expenditure credit being given under this Chapter and relief being given under Chapter 3 of Part 15E (museums and galleries exhibition tax relief), see section 1218ZCG(2).]]]

Textual Amendments

F5 S. 104BA inserted (with effect in accordance with Sch. 18 para. 23 of the amending Act) by Finance Act 2013 (c. 29), Sch. 18 paras. 8, 22; S.I. 2013/1817, art. 2(2); S.I. 2014/1962, art. 2(3)

F6 S. 104BA(4) inserted (with effect in accordance with Sch. 4 para. 17 of the amending Act) by Finance Act 2014 (c. 26), Sch. 4 paras. 9, 16; S.I. 2014/2228, art. 2

F7 S. 104BA(5) inserted (for specified purposes and with effect in accordance with Sch. 6 paras. 20, 21(1)(b) of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 6 para. 10