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D1.402A Qualifying conditions for R&D tax relief

There are certain qualifying conditions which must be met under the corporate R&D tax relief regimes.

Only a company can claim enhanced R&D tax relief¹. The company is entitled to relief for an accounting period if it has qualifying R&D expenditure which is allowable as a deduction in calculating the profits of the trade for the purposes of corporation tax². Therefore relief is only available if the company is subject to corporation tax.

An overseas permanent establishment of a UK company can qualify for relief as long as the permanent establishment is within the charge to corporation tax and the R&D is relevant to a trade within the charge to corporation tax. For accounting periods beginning on or after 1 April 2024, the legislation explicitly states that expenditure attributable to an exempt foreign permanent establishment does not qualify for relief³.

An exempt foreign permanent establishment is one to which an election for exemption from corporation tax applies (see D4.801A). Expenditure is attributable