Research and development capital allowances or RDAs is an oft forgotten incentive by HMRC which allows 100% of your expenditure on R&D facilities, IT systems, plant and machinery against a corporation’s tax liability in the first year.
What this means is if your company has, in its first year:
- Built or Refurbished any R&D Facilities.
- Developed an Internal IT System.
- Invested in any plant, machinery, fixtures, or fittings to support R&D.
You should apply for these R&D capital allowances which will write these expenditures off.
What qualifies for the R&D capital allowances?
- Laboratory Equipment
- Company Cars for R&D Staff
- R&D Facilities (if standalone, else R&D must account for 75% of total cost of facility to cover the entirety)
- 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.”
A company can claim its R&D capital allowances up to a year after the filing deadline of its tax return – and R&D capital allowances can be claimed retrospectively, up to two years in arrears.
For more information about this, and to discover whether your business qualifies please visit HMRC.