Tax relief for research and development (R&D) expenditure differs depending upon whether the expenditure is capital or revenue in nature (see the Research and development tax reliefs guidance note).

The definition of R&D for capital expenditure and revenue expenditure is very similar. For both capital and revenue expenditure R&D is defined as 'activities which fall to be treated as R&D in accordance with generally accepted accounting practice'. For capital expenditure, R&D also includes oil and gas exploration and appraisal. For revenue expenditure, oil and gas exploration and appraisal is specifically excluded.CAA 2001, s 437; CTA 2009, ss 1041,1138

Regulations also apply the guidelines published by the Department of Business, Innovation and Skills (BIS). Activities that fall within these guidelines will be qualifying R&D expenditure. SI 2004/712 (subscription sensitive)

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