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If you’re an innovative business that’s investing in R&D, you can maximise your profits and minimise your taxes with research and development allowances (RDA).
How it works
Research and development allowances (RDA) are a type of Capital Allowance that supports innovative businesses with a 100% first-year tax deduction against your annual profits for capital expenditure on R&D.
Like R&D Tax Relief, this allows you free up cash flow for reinvestment in growth and development for your business.
For accounting purposes, R&D typically refers to a project or projects that have looked for an advance in science and technology as well as faced uncertainty during the work. You’ll need to demonstrate either how you’ve overcome the uncertainty or that you’ve at least tried to overcome the uncertainty. The solution must be complex (i.e., a professional in the field can’t easily work out your innovation).
For claiming RDA, the definition of research and development also includes the costs of oil and gas exploration and appraisal.
Research and development allowances are only available for traders (and not for people carrying out professions or vocations). The trader’s work must also directly link to the R&D.
HMRC defines a trade as a commercial operation where the trader sells goods or services to customers.
Eligible activity
If your company invests in research and development, whether it’s developing new/improving existing technologies, creating facilities for carrying out R&D, or providing assets to enable R&D, the amount spent on such capital assets can be written off in full against the company’s profits in the first year.
The acquisition of patents/rights for the R&D does not count as qualifying expenditure.
Qualifying expenditure for RDA includes:
Claim relief on assets used directly in R&D activities.
Benefit from allowances on laboratories, testing facilities and other dedicated R&D sites.
Claim on qualifying assets that support R&D, including equipment and vehicles used by employees.
Our services
From property acquisitions to fit-outs and refurbishments, our Capital Allowances experts are on hand to help businesses claim the relief they are entitled to.
Claim with Leyton
We’re experts at unlocking huge savings for businesses that have invested in capital expenditure. Our capital allowances team have years of field experience in building, construction and surveying, uniquely allowing them to identify qualifying expenditure and maximise your savings.