Research and Development expenditure credit for Northern Ireland companies — clarification of the overseas restriction
Published 21 July 2025
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This publication is available at https://www.gov.uk/government/publications/research-and-development-clarifying-the-scope-of-the-overseas-restriction/research-and-development-expenditure-credit-for-northern-ireland-companies-clarification-of-the-overseas-restriction
Who is likely to be affected
Companies claiming merged Research and Development (R&D) Expenditure Credit (RDEC) tax relief with a registered office in Northern Ireland which incur overseas expenditure.
General description of the measure
This measure makes amendments to the exemption rules for companies with a registered office in Northern Ireland to clarify that the overseas restrictions exemption applies to enhanced R&D intensive support (ERIS) claimants only.
Policy objective
The government is committed to supporting R&D investment across the UK. These changes bring the arrangements in RDEC for Northern Ireland companies in line with the rest of the UK.
Background to the measure
The R&D relief for small or medium-sized enterprises was replaced in April 2024 by the RDEC, and overseas expenditure restrictions were introduced, as well as an enhanced rate of payable credit for R&D intensive loss-making small and medium-sized enterprises.
Recognising the particular market conditions in Northern Ireland, companies with a registered office there and claiming ERIS are not subject to restrictions on relief for overseas R&D expenditure.
This measure puts beyond doubt that the exemption for overseas expenditure for Northern Ireland companies only applies under ERIS and not under RDEC. For RDEC, the same rules on overseas expenditure apply across the United Kingdom.
Detailed proposal
Operative date
The measure will apply to all claims for RDEC made on and after 30 October 2024 by companies with a registered office in Northern Ireland.
Current law
The RDEC scheme is in Chapter 1A of Part 13 Corporation Tax Act 2009. The particular exemption rules are in Chapter 9 of Part 13 Corporation Tax Act 2009.
Proposed revisions
A minor legislative amendment will be made in the primary legislation to put beyond doubt in which circumstances the exemption applies, to ensure that the legislation correctly reflects policy intention.
Summary of impacts
Exchequer impact (£ million)
| 2024 to 2025 | 2025 to 2026 | 2026 to 2027 | 2027 to 2028 | 2028 to 2029 | 2029 to 2030 |
|---|---|---|---|---|---|
| Nil | Nil | Nil | Nil | Nil | Nil |
This measure is not expected to have an Exchequer impact.
Economic impact
This measure is not expected to have any significant economic impacts.
Impact on individuals, households and families
There is expected to be no impact on individuals as this measure only affects businesses. There is not expected to be an impact on family formation, stability or breakdown.
Equalities impacts
This measure only affects businesses, therefore it is not anticipated that there will be disproportionate impacts on those in groups sharing protected characteristics.
Impact on business including civil society organisations
The measure is not expected to cause continuing costs for businesses.
The measure is expected to have a negligible one-off implementation cost for businesses as they familiarise themselves with the corrected legislation.
Operational impact (£ million) (HMRC or other)
This measure will not require changes to HMRC’s processes.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
This measure will be monitored through information collected from claims and claim notifications.
Further advice
If you have any questions about this change, email the R&D Policy team at randd.policy@hmrc.gov.uk.