Section 87 | Expenses of research and development

(1)If a person carrying on a trade incurs expenses of a revenue nature on research and development—

(a)related to the trade, and

(b)directly undertaken by or on behalf of the person,

a deduction is allowed for the expenses in calculating the profits of the trade.

(2)For this purpose expenses incurred on research and development—

(a)do not include expenses incurred in the acquisition of rights in, or arising out of, research and development, but

(b)subject to that, include all expenses incurred in carrying out, or providing facilities for carrying out, research and development.

(3)The reference in this section to research and development related to a trade includes—

(a)research and development which may lead to or facilitate an extension of the trade, and

(b)research and development of a medical nature which has a special relation to the welfare of workers employed in the trade.

(4)The same expenses may not be brought into account under this section in relation to more than one trade.

(5)In this section “research and development” has the meaning given by section 1006 of ITA 2007 and includes oil and gas exploration and appraisal.^F1

(6)This section does not apply to professions or vocations.