What types of assets are eligible for RDA?
Capital assets purchased to perform or support R&D are eligible for RDA including plant, machinery, computers and buildings.
When would a company not wish to apply for RDA?
A company may not wish to claim RDA where there is no real opportunity to reduce profits, or increase taxable losses further, in that particular year.
There may be a number of reasons for this but primarily it will apply to companies that do not have taxable profits, or when increasing capital allowances will not create a bigger loss that can be surrendered for a tax credit.
The RDA process
The total figure for RDA is passed to the client’s accountant for incorporation into the tax computation, in the same way as we pass the figure for R&D tax relief.
The accountant then utilises the deduction in the most effective way for that company, generally choosing the most tax efficient form of depreciation.