Find out about Corporation Tax relief you can claim for costs on R&D if you’re a small and medium-sized enterprise with an accounting period that starts before 1 April 2024.
A company meets the intensity condition if: it’s claiming for an accounting period beginning before 1 April 2024 and ending on or after 1 April 2023 its relevant R&D expenditure is at least 40% of its total expenditure (including that of any connected companies ) You will need to meet the condition for the period for which the claim is made. The periods you need to consider are: the accounting period for which the claim is made any periods of account of connected persons (worldwide) which overlap with the claimant’s accounting period You’ll need to identify the costs that relate to the periods under consideration. For accounting periods aligned with the accounting period of the claimant, use the exact figures for that accounting period. You must use a reasonable method to allocate costs of the connected company to the period of time covered by the accounting period of the claimant company where either: there is a mismatch of accounting periods between the claimant and one or more connected company a connected company is overseas (and so has no accounting period for UK tax purposes) In certain circumstances it may be appropriate to split costs on a time (day) basis. In other cases it will be necessary to consider when costs were incurred to give a fair result, for example, where R&D expenditure is incurred unevenly through a period. Any basis you choose should be used consistently and you should be able to explain effectively why you’ve used it. Relevant R&D expenditure means costs on which R&D relief could be claimed for the period, whether or not a claim is actually made. Generally, it must also form part of the total relevant costs. Total relevant expenditure includes: costs that are brought into account under Generally accepted accounting practice (GAAP) in calculating the profits of a trade — if your accounts are prepared correctly under GAAP, this will be costs that feed into the profit before tax in your profit and loss account or income statement any pre-trad
If your company and project are eligible to claim R&D tax relief for small and medium-sized enterprises, you can apply for advance assurance to find out if your claim will be accepted. You must also check if you need to tell HMRC that you’re planning to claim this relief.
Research and Development tax relief for small and medium-sized enterprises
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Find out about Corporation Tax relief you can claim for costs on R&D if you’re a small and medium-sized enterprise with an accounting period that starts before 1 April 2024.
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