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An R&D allowance is equal to 100% of qualifying expenditure and is given for the relevant chargeable period¹, which is:

1. Ìý

   (a)ÌýÌýÌýÌý the chargeable period in which the expenditure is incurred; or

2. Ìý

   (b)ÌýÌýÌýÌý if it was incurred before the chargeable period win which relevant trade was set up and commenced, that period².

Specific provision is made for a person to claim for the allowance to be reduced to a specified amount³. If this is done, however, no relief at all can be obtained for the balance of the expenditure because there are no writing-down allowances for R&D expenditure.

The allowance is treated as an expense of the trade, and any balancing charge (see further below) is treated as a receipt of the trade⁴.

Where an additional VAT liability is treated as additional expenditure under the provisions described in B3.703, any allowance arising is available for the chargeable period in which the liability accrues or, if it accrued before the chargeable period in which the