Corporation Tax Act 2009 section 1044

Additional deduction in calculating profits of trade

Section 1044 provides an enhanced tax deduction for small and medium-sized enterprises that carry on a trade, incur qualifying research and development expenditure, and meet the R&D intensity condition.

• The company must be a small or medium-sized enterprise that carries on a trade during the accounting period and must not be an ineligible company.
• The company must meet the R&D intensity condition in the period, or have obtained relief under this chapter for its most recent prior 12-month accounting period by meeting that condition then.
• The company must have qualifying Chapter 2 expenditure that is already allowable as a deduction in calculating the trade profits, and must make a trading loss in the period.
• The relief, which must be claimed, is an additional deduction equal to 86% of the qualifying Chapter 2 expenditure, on top of the normal deduction for that expenditure.