Corporation Tax Act 2009 section 1063

Additional deduction in calculating profits of trade

Section 1063 allows small or medium-sized enterprises to claim an enhanced tax deduction for research and development expenditure that has been contracted out to them by a large company.

• A small or medium-sized enterprise (SME) that carries out R&D work as a subcontractor can claim an additional tax deduction on that expenditure
• The expenditure must already be deductible in calculating the company's trading profits before the additional relief applies
• The additional deduction uplifts the qualifying expenditure by 30%, providing a total deduction greater than the actual cost incurred
• Only companies that are liable to corporation tax can claim this relief