Income Tax (Trading and Other Income) Act 2005 section 87

Expenses of research and development

Section 87 allows a trader to deduct revenue expenses incurred on research and development that is related to and directly undertaken by or on behalf of the trade.

• Revenue expenses on R&D related to the trade and directly undertaken by or on behalf of the trader are deductible in calculating trading profits, but the cost of acquiring rights in R&D is excluded.
• Qualifying R&D includes work that may lead to or facilitate an extension of the trade, as well as medical research with a special relation to the welfare of workers employed in the trade.
• The same expenses cannot be claimed against more than one trade, and the definition of research and development follows section 1006 of ITA 2007, which also covers oil and gas exploration and appraisal.
• This relief applies only to trades and does not extend to professions or vocations.