Taxes Consolidation Act 1997 section 765

Allowances for capital expenditure on scientific research

Section 765 provides an immediate 100% allowance for capital expenditure on scientific research incurred by a person carrying on a trade, covering both research related and unrelated to the trade, and sets out rules on cessation of use, double allowance restrictions, and carry-forward of unused relief.

• A trader who incurs capital expenditure on scientific research (other than on buildings, unless the construction itself is scientific research) may claim an immediate 100% allowance for the full amount of the expenditure, provided the asset is in use for research at the end of the chargeable period and the claim is made within two years.
• Where the research is unrelated to any trade carried on by the person, an immediate allowance equal to 100% of the expenditure is still available against trading profits for the period in which the expenditure was incurred.
• If an asset representing the research expenditure ceases to be used for scientific research, a clawback arises as a trading receipt equal to the lower of the allowance granted or the value of the asset immediately before cessation, and any subsequent wear and tear allowance is based on the reduced (tax written-down) cost.
• Assets for which a scientific research allowance has been given cannot also attract wear and tear allowances or the old rateable valuation deduction for pre-1956 industrial buildings, and any unused scientific research allowances may be carried forward against future trading income.