Using R&D relief to get capital allowances

Last week we spoke about how companies are potentially missing out on hundreds of thousands of pounds of tax relief by not making R&D claims. This week we focus on an area which companies who are making the claims often miss – R&D capital allowances.R&D capital allowances provide a deduction of 100% for expenditure on capital assets used for R&D purposes. This will include the obvious items, such as computers, testing equipment and other types of machinery. However, it also includes the building in which the R&D is carried on.

The inclusion of buildings is very generous, in that, ordinarily, the actual ‘bricks and mortar’ would not qualify for normal main or special rate pool capital allowances (buildings are specifically excluded). Like the now phased-out Industrial Buildings Allowance, R&D allowances are available on all the costs of the building (excluding land) – not just the normal qualifying items.

There will need to be an apportionment exercise carried out where facilities have been acquired/renovated and only part of these are used to carry on R&D activities. General office/warehouse facilities will not qualify.

The key message here is that if clients have spent large amounts on their buildings in the last two years, and are undertaking R&D in some form, it is worth considering a claim for R&D relief, if only to take advantage of the additional capital allowances!

Forbes Dawson has an in-house team of R&D specialists and are able to deal with all types of R&D claims. For further details speak to Tom Minnikin (0161 927 3856) or your usual contact.




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