Corporation Tax Act 2009 section 1042D

Qualifying expenditure: in-house R&D

Section 1042D sets out the four conditions that must all be met for a company's expenditure on research and development carried out in-house to qualify as Chapter 1A expenditure.

• The expenditure must relate to R&D undertaken by the company itself, not contracted out to it by another party
• Qualifying costs are limited to staffing costs, software, data licences, cloud computing services, consumable items, externally provided workers, and payments to clinical trial subjects
• The R&D must not have been contracted out to the company — the company must be carrying out the R&D on its own initiative, not as a subcontractor for someone else
• The expenditure must not be attributable to an exempt foreign permanent establishment of the company