This article covers pre-trading expenditure under the relief available to SMEs for accounting periods beginning before 1 April 20241. For accounting periods beginning on or after 1 April 2024, relief for R&D expenditure is available to SMEs under the merged RDEC scheme; see D1.417. SMEs which are loss-making and meet an R&D intensity condition can as an atlernative claim the R&D reliefs at D1.419 for accounting periods beginning on or after 1 April 2024.Those reliefs include similar provision for such an SME to make an election to treat pre-trading R&D expenditure as a trading loss.
An SME which is starting up in business may incur qualifying R&D expenditure before it begins to trade. In the normal way, such expenditure is treated as incurred on the first day of trading2.
Pre-trading expenditure election for alternative treatment for R&D
The following applies for accounting periods beginning before 1 April 2024.
Special provisions allow an SME company with qualifying pre-trading expenditure to claim SME R&D relief
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