Income Tax Act 2007 section 252A

Meaning of "knowledge-intensive company"

Section 252A defines what qualifies a company as a "knowledge-intensive company" for the purposes of the Enterprise Investment Scheme, which entitles it to higher investment limits, a longer initial investing period and a higher employee threshold.

• A company must meet at least one of two operating costs conditions: either 15% of operating costs spent on R&D or innovation in at least one of the three preceding years, or at least 10% in each of those three years
• The company must also satisfy at least one of two further tests: the innovation condition (active engagement in creating intellectual property that will form the greater part of the business within 10 years) or the skilled employee condition (at least 20% of full-time equivalent employees hold a relevant higher education qualification and work directly on R&D or innovation)
• Where the company is a parent, the operating costs, intellectual property activity and employee numbers of its qualifying subsidiaries are aggregated with those of the parent for the purpose of each test
• The Treasury may amend these conditions by regulation, subject to approval by the House of Commons