Knowledge Intensive criteria
Criteria to meet Knowledge Intensive qualifications.
According to the latest UK guidance, companies may qualify as Knowledge-Intensive if they carry out research, development, or innovation when they issue shares. In return for meeting additional criteria, HMRC allows more lenient rules and relaxed funding limits.
See the requirements rules below for more information:
| Operating costs conditions | Innovation condition | Skilled employee condition | |||
| DESCRIPTION | A substantial portion of companies’ resources must be allocated to research and development activities, which aim to innovate and create new products, technologies, or processes. | Knowledge Intensive companies typically focus on creating, developing and owning intellectual property such as patents. | Knowledge-intensive companies must employ a highly skilled workforce directly involved in research and innovation. | ||
| GOVERNMENT PURPOSE | To support companies who will shape the future of the UK. These companies invent new products to propel the UK forward or resolve existing problems. | To support unique companies, create a new marketplace or operate in an existing one. | To prioritise companies that employ highly skilled, highly paid experts. In return, the government will receive increased Corporation and Income tax employees pay. It may be argued that companies that hire highly skilled employees have more assurance of success. | ||
| AN EXAMPLE | Life Science companies engaging in clinical trials or new product development support the NHS by reducing costs or improving efficiency. | Technology companies are developing new patented products that support financial systems, transport, and technology. | Life Science companies hire skilled surgeons, clinicians, or experts to create new medicines or technologies. | ||
| CRITERIA | Meets one or both of the following:
(1) In any one or more of the three previous years, at least 15% of the relevant operating costs* was spent on research, development or innovation or (2) In the previous three years, at least 10% of the relevant operating costs* were spent on research, development, or innovation. |
Plus | Meets both of the following:
(1) The company (or a subsidiary company within the group) is engaged in intellectual property creation at the date of issue; and (2) It is reasonable to assume that in 10 years, the exploitation or utilisation of the intellectual property will form the more significant part of the company’s business (or the business of the group taken together). |
And | At least 20% of the full-time equivalent employees are ‘skilled employees’. ‘Skilled employees’ are those with a master’s degree or above engaged directly in research, development or innovation activities. |
* Where the issuing company is a parent company, the operating costs of the parent and qualifying subsidiaries are aggregated.
For more information, please see the government website.
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