R&D Tax Relief: HMRC closes loophole. 7th September 2017 Companies that are developing innovative new products, services or systems have long understood the generosity of the R&D tax relief rules. These give a notional 130% uplift to eligible costs in the company’s corporation tax computation. Such eligible costs include ‘employee costs’, which hitherto has included all ‘reimbursed expenses’. This has always seemed overly generous and hence open to abuse. Unsurprisingly, therefore, HMRC have now issued new guidance restricting which reimbursed expenses can be included in such an R&D Claim: HMRC Corporation Tax Manual The new definition of such eligible expenses is: “the expense is an expense the employee pays in order to fulfil the requirements of her employment”. So normal reimbursed costs, such as out of office travel to an R&D review meeting and the related subsistence, should still qualify, but expenses not normally settled through the employee, such as rent, accountancy fees, etc, will no longer qualify. Blog entry by: Ian Piper.