What is the definition of R&D for tax purposes?
Answered 17 March 2026
Here is a comprehensive answer on the definition of R&D for tax purposes.
Definition of R&D for Tax Purposes
What the law says
The primary statutory definition is found in ITA 2007, s.1006, which applies for Income Tax Act purposes:
"Research and development" means activities that fall to be treated as research and development in accordance with generally accepted accounting practice (GAAP).
The Treasury has the power to make regulations specifying activities that are — or are not — to be treated as R&D, and those regulations may make provision by reference to guidelines issued by the Secretary of State.
For Corporation Tax purposes, CTA 2009, s.1138 mirrors this definition: "research and development" means activities that fall to be treated as R&D in accordance with GAAP, subject to the same regulations made under ITA 2007, s.1006. Unless otherwise expressly provided, R&D does not include oil and gas exploration and appraisal.
HMRC guidance / practice
The GAAP-based definition is modified by guidelines issued by the Secretary of State (currently the BEIS/DSIT Guidelines), which are given legal force by Parliamentary Regulations (SI 2004 No. 712 for periods beginning before 1 April 2023; SI 2023 No. 293 for periods beginning on or after 1 April 2023).
The Guidelines set out the following core definition:
1. The project test
"R&D for tax purposes takes place when a project seeks to achieve an advance in science or technology."
2. Directly contributing activities
"The activities that directly contribute to achieving this advance in science or technology through the resolution of scientific or technological uncertainty are R&D."
3. Qualifying indirect activities (QIAs)
"Certain qualifying indirect activities related to the project are also R&D. Activities other than qualifying indirect activities which do not directly contribute to the resolution of the project's scientific or technological uncertainty are not R&D."
Key concepts explained in the Guidelines:
Advance in science or technology An advance means an advance in overall knowledge or capability in a field of science or technology — not a company's own state of knowledge or capability alone. Routine analysis, copying or adaptation of an existing product, process, service or material will not constitute an advance. Even if the advance is not ultimately achieved, R&D still takes place.
Scientific or technological uncertainty
"Scientific or technological uncertainty exists when knowledge of whether something is scientifically possible or technologically feasible, or how to achieve it in practice, is not readily available or deducible by a competent professional working in the field." Uncertainties that can readily be resolved by a competent professional are not scientific or technological uncertainties.
Science and technology defined
- Science is the systematic study of the nature and behaviour of the physical and material universe. Work in the arts, humanities and social sciences (including economics) is not science for these purposes.
- Technology is the practical application of scientific principles.
Important caveat: Not all activity that may be considered R&D in the ordinary commercial or accountancy sense will necessarily be R&D for tax purposes. The accountancy definition is the starting point, but it is qualified by the BEIS Guidelines.
Citation sources
Note on the text below; These guidelines were introduced by Statutory Instrument 293 of 2023 and apply to accounting periods which begin after 31 March 2023. Please continue to refer to the 2004 guidelines (CIRD 81900) when preparing claims for accounting periods which begin before 1 April 2023. Since it is not possible to include individual words in bold in the CIRD you might, given the importance which paragraph 2 of the guidelines gives to those words, wish to use the version which is availab
Part 16 Income Tax Acts definitions etc Chapter 1 Definitions Meaning of “research and development” 1006 1 This section has effect for the purposes of the provisions of the Income Tax Acts which apply this section. 2 “ Research and development ” means activities that fall to be treated as research and development in accordance with generally accepted accounting practice. This is subject to subsection (3). 3 The Treasury may by regulations specify activities which— a are to be treated as being “
en legal force by Parliamentary Regulations. These guidelines explain what is meant by R&D for a variety of tax purposes, but the rules of particular tax schemes may restrict the qualifying expenditure.[2] 2. In these guidelines a number of terms are used which are intended to have a special meaning for the purpose of the guidelines. Such terms are highlighted on first appearance and defined later. [1] For the purposes of research and development allowances (Part 6 CAA01) this definition is exte
Part 24 Corporation Tax Acts definitions etc Chapter 1 Definitions “Research and development” 1138 1 This section has effect for the purposes of the provisions of the Corporation Tax Acts which apply this section. 2 “ Research and development ” means activities that fall to be treated as research and development in accordance with generally accepted accounting practice. This is subject to subsections (3) and (4). 3 Activities that are “ research and development ” for the purposes of section 1006
1 April 2023 Changes Statutory Instrument 293 of 2023 introduced new guidelines which apply to accounting periods which begin after 31 March 2023. Those new guidelines can be found on page 81910 of this manual. Please continue to refer to the guidelines below for acounting periods which began before 1 April 2023. Note regarding text; The guidelines below are the responsibility of the Department for Business, Energy and Industrial Strategy (BEIS). They were introduced by regulation (Statutory Ins
the Statement of Standard Accounting Practice which defines R&D. The accountancy definition is then modified for tax purposes by these Guidelines, which are given legal force by Parliamentary Regulations. These Guidelines explain what is meant by R&D for a variety of tax purposes, but the rules of particular tax schemes may restrict the qualifying expenditure. 2. … The Definition of Research & Development 3. R&D for tax purposes takes place when a project seeks to achieve an advance in science o
y realised, R&D still takes place. 11. If a particular advance in science or technology has already been made or attempted but details are not readily available (for example, if it is a trade secret), work to achieve such an advance can still be an advance in science or technology. 12. However, the routine analysis, copying or adaptation of an existing product, process, service or material, will not be an advance in science or technology. Scientific or technological uncertainty 13. Scientific o
or service in a new or appreciably improved way (e.g. a product which has exactly the same performance characteristics as existing models, but is built in a fundamentally different manner) will therefore be R&D. 10. Even if the advance in science or technology sought by a project is not achieved or not fully realised, R&D still takes place. 11. If a particular advance in science or technology has already been made or attempted but details are not readily available (for example, if it is a trade
Research and Development (R&D) tax relief (or credit) is a company tax relief that can either reduce a company’s tax bill or, for some small or medium sized (SME) companies, provide a cash sum. It is based on the company’s expenditure on R&D. For there to be R&D for the purpose of the tax relief, a company must be carrying on a project that seeks an advance in science or technology. It is necessary to be able to state what the intended advance is, and to show how, through the resolution of scien