Capital spending on R&D has its own relief.

Research and development allowances, often shortened to RDAs, are a capital allowance for capital spending on R&D. Under section 441 of the Capital Allowances Act 2001 the person who incurs qualifying expenditure is entitled to an allowance for the full amount. HMRC's manual describes them as very generous because the rate is 100%. They are separate from R&D tax relief, which covers revenue costs.

HMRC's guidance on R&D costs lists capital expenditure as something you cannot claim under R&D tax relief. The relief is aimed at revenue costs such as staff, consumables, software and some cloud and data costs. Capital spending is dealt with through capital allowances instead, which is why RDAs and other allowances are part of the same review of your project spending.

HMRC's Capital Allowances Manual says only traders qualify, and a person carrying on a profession or vocation is not entitled. The research and development must relate to the trade the trader carries on. A company that is trading and spends capital on research for its own trade is the usual case. We check the trade link against your accounts and your project descriptions.

Not exactly. Section 437 of the Capital Allowances Act 2001 treats activities as research and development if they count as such under generally accepted accounting practice, and allows regulations to add or exclude activities. R&D tax relief uses the government's guidelines on advances in science or technology. A project can need testing against both tests, so we do not assume one answer carries over.

The allowance equals the full amount of the qualifying expenditure, and the claimant can ask for it to be reduced if they prefer. Section 441 gives the entitlement, and HMRC's manual describes the rate as 100%. If a disposal value has to be brought into account, the allowance is the amount by which the expenditure exceeds it.

HMRC's manual says a balancing charge applies if an asset representing qualifying expenditure is sold, demolished or destroyed. No balancing charge applies merely because the asset's use changes. This means the 100% allowance is not a permanent free pass if you later dispose of the asset. We flag these points so disposals are considered at the time, not years later.

Section 437 of the Capital Allowances Act 2001 says that, for the purposes of these allowances, research and development includes oil and gas exploration and appraisal, alongside activities that count as R&D under generally accepted accounting practice. If your business is in that sector, tell us early so we can look at how the allowances and your R&D claim fit together.

Full expensing is a 100% first-year allowance for companies on new main rate plant and machinery, subject to conditions such as the asset being unused and not second-hand. RDAs apply to capital expenditure on research and development for the trade. Some purchases could fit either, which is why we map each purchase to the right allowance and check nothing is double counted.

HMRC's outline of RDAs does not describe a cap on the amount of qualifying expenditure. The limits come from the conditions: you must be a trader, the spend must be capital, and it must be research and development related to the trade. We do not assume any other cap applies, and we check the manual wording when a claim is large.

Make a list of capital items bought for R&D, with dates, cost, supplier invoices and what project each supported. Also note anything sold, scrapped or reused for production. We use this alongside your project records to split spending between revenue costs for the R&D claim and capital items for allowances, and then pass it to your accountant.