R&D Capital Allowances

R&D Capital Allowances (RDA’s) release cash into your business by allowing you to write down all of your R&D spending on fixed assets. Unlike the Annual Investment Allowance, RDA is not capped so the more your company spends on fixed assets for R&D, the more cash will be released. And the best news is that R&D Capital Allowances can be claimed retrospectively, up to two years in arrears.

By offering 100% tax relief on most capital expenditure on R&D, Research and Development Capital Allowances can reduce your company’s corporation tax.

The reduction depends on your company’s cost of capital. Based on a cost of capital of 5% over a 25 -year period, RDA represents a net present value saving of 28%.

Your company should apply for R&D capital allowances if it has:

• built or refurbished R&D facilities,
• developed an IT system for internal use,
• invested in plant, machinery, fixtures, or fittings to support R&D activities.

When should my company claim its entitlement to R&D Capital Allowances?

Your company can claim its RDA up to a year after the filing deadline of its tax return. Because this is also true for R&D Tax Relief, it is often sensible to claim both allowances at the same time.

What types of capital expenditure qualify for R&D Capital Allowances?

Most R&D related capital expenditure qualifies for a tax reduction under R&D Capital Allowances, notably spending on R&D facilities such as buildings, laboratories, and so on. Exceptions include spending on intellectual property and on land.

Spending on the following is always allowable under RDA:

• R&D facilities (such as buildings) or on refurbishing a development facility. Furthermore, if an R&D centre forms part of a larger facility – and if the centre accounts for at least 75% of the overall cost of the facility – then R&D Capital Allowances can apply to the entire facility.
• Laboratory equipment.
• Company cars for R&D staff.

Spending on the following may be allowable under RDA:

• Developing new IT systems for internal use.
• Equipment to enable a technological advancement in a process, material, device, product, or service. The advancement must increase the overall knowledge or capability in a field of science or technology.

By taking advantage of our specialist knowledge and experience, you can be sure of maximising your R&D Capital Allowances Claim.

• We handle your RDA claim from start to finish, taking up as little as possible of your time.
• We can maximise your claim because our expert consultants know precisely what you can claim and how much you can claim.
• We write reports describing your R&D capital expenditure that R&D tax inspectors will approve.
• We make sure HMRC handles your claim promptly, because of our right-first-time approach and because of our outstanding relationship with R&D tax inspectors.
• 100% success. We have been successful in every RDA claim submitted for our clients, for over ten years and without exception.
• An unbeatable offer. We are so confident that we deliver a winning service, we offer our RDA claim services on a success-only basis.

For more information, download our R&D Capital Allowances fact sheet