Definition
Eligible R&D activity, for UK tax purposes, is work undertaken as part of a project that seeks an advance in the overall knowledge or capability of a field of science or technology through the resolution of scientific or technological uncertainty. The test applies regardless of whether the advance is ultimately achieved. Eligible activities include directly contributing work such as design, prototyping and testing, and qualifying indirect activities such as scientific research management and R&D-specific training. Routine work, market research, administration and aesthetic design are not eligible.
How HMRC defines it
HMRC incorporates the BIS Guidelines in full at CIRD81300 and cross-references them at CIRD81350 for directly contributing activities and CIRD81900 for qualifying indirect activities. The 2023 update to the guidelines, titled Guidelines on the meaning of research and development for tax purposes, is the current operative version.
Practical example
A pharmaceutical SME running a clinical trial programme treats the clinical trial design, laboratory assay development and statistical modelling as directly contributing R&D. Ancillary activities such as recruitment of trial sites and ethics-committee liaison qualify only to the extent they are specific to the R&D, and general project administration does not qualify.