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.