31 August 2010 – The rules for claiming additional tax relief on research and development (R&D) are due to are relaxed. Small and medium-sized enterprises (SMEs) carrying out research and development (R&D) will be able to claim the additional relief on their activities, even if they don’t own the intellectual property that will result from the R&D.

The new arrangement for claiming the relief is due to become law this autumn as part of the Government’s finance bill. SMEs will be able to apply the new rule to any expenditure on R&D in an accounting period ending on or after 9 December 2009. The relaxation of the rule will particularly benefit sub-contractors carrying out research for larger companies. The new rules will guarantee that at least one partner in the relationship can apply for additional tax relief.

Designed to promote investment in scientific and technical innovation, R&D tax relief provides companies with an extra tax allowance to reduce their tax bill. The SME Scheme is open to organisations with fewer than 500 employees, an annual turnover of less than €100 million (£83,130,905) and a balance sheet not exceeding €86 million (€71,480,847).

For more details on R&D relief for Corporation Tax, see www.hmrc.gov.uk/ct/forms-rates/claims/randd.htm.