What is the cap on R&D aid under section 1113 of the Corporation Tax Act 2009?

Section 1113 imposes a cap of 7.5 million euros on the total R&D aid a company may receive for any single research and development project. If total aid for a project reaches this ceiling, further qualifying R&D relief claims are proportionally restricted or wholly denied to stay within the limit.

How is total R&D aid calculated when testing the 7.5 million euro cap?

Total R&D aid is calculated under section 1114 of the Corporation Tax Act 2009. The calculation assumes the company has already made a claim or election for the relief in question. This means the relief about to be claimed is included when checking whether the 7.5 million euro cap would be exceeded.

What counts as qualifying R&D relief for the purposes of section 1113?

Qualifying R&D relief means any relief or R&D tax credit available under Chapter 2 of Part 13 of the Corporation Tax Act 2009. Chapter 2 specifically provides relief for small and medium-sized enterprises in respect of research and development expenditure they incur directly on qualifying projects.

Can the Treasury change the 7.5 million euro R&D aid cap?

Yes, the Treasury has the power to increase the 7.5 million euro threshold by making regulations. It may also amend other provisions of the Chapter relating to the cap. However, the Treasury cannot use this regulatory power to alter section 1113 itself.

Corporation Tax Act 2009 section 1113

Cap on R&D aid under Chapter 2 or 7

Section 1113 imposes a cap on the total amount of R&D aid that a company may claim in respect of a single research and development project.

Total R&D aid for any single project must not exceed 7.5 million euros
Relief is restricted proportionally where the cap would otherwise be breached
Qualifying R&D relief covers relief or R&D tax credits available to SMEs under Chapter 2
The Treasury has power to increase the 7.5 million euro cap by regulations

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