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Corporation Tax Incentives Checklist for Overseas Companies Setting Up in the UKWritten on July 25, 2025 by Kirk Rice LLP

Expanding into the UK market can bring significant growth opportunities, but it also means understanding how to make the most of the corporation tax incentives available. From R&D reliefs to capital allowances, knowing what’s on offer—and how to claim it—can help reduce costs and improve cash flow from the start.

Use our handy Corporation Tax incentives checklist for overseas companies setting up in the UK as a starting point for planning your UK tax strategy. 

R&D Tax Relief: Check Your Eligibility Early 

The UK offers generous reliefs for companies investing in research and development. If your UK subsidiary will carry out eligible projects, you could benefit from: 

• SME R&D Relief: Enhanced deduction against taxable profits or a payable credit for qualifying expenditure. 
• R&D Expenditure Credit (RDEC): A taxable credit for larger companies or those not meeting SME criteria. 

Checklist: 

• Confirm your UK company will be subject to UK corporation tax. 
• Identify qualifying activities that aim to resolve scientific or technological uncertainty. 
• Keep detailed records of project costs and activities. 
• Understand deadlines: claims must be submitted within two years of the end of the accounting period. 

For full details, refer to HMRC’s guidance on R&D tax relief. 

Capital Allowances for Equipment and Property 

When your UK business invests in assets such as plant, machinery, or fixtures, you can claim capital allowances to reduce your taxable profits. 

Key points to note: 

• The Annual Investment Allowance (AIA) allows you to deduct the full cost of qualifying expenditure (up to a set annual limit). 
• Certain energy-efficient and environmentally beneficial assets may qualify for enhanced allowances. 
• Expenditure on property improvements can also attract relief, subject to specific rules. 

Checklist: 

• Identify all capital purchases planned in your first trading period. 
• Obtain and retain invoices and records of asset use. 
• Review eligibility for AIA and other allowances before year-end. 

Patent Box Relief: Reducing Tax on Profits from Innovation 

If your UK subsidiary holds qualifying patents and generates income from them, the Patent Box regime can apply a reduced corporation tax rate (currently 10%) on those profits. 

Checklist: 

• Confirm whether patents are granted and owned (or exclusively licensed) by your UK company. 
• Set up systems to track relevant income streams. 
• Seek advice early to ensure the Patent Box applies to your structure. 

For more information, see HMRC’s Patent Box guidance. 

Employee Incentive Schemes 

UK-approved share schemes can help you recruit and retain skilled employees’ tax-efficiently. While these plans need careful structuring, they can also deliver corporation tax deductions. 

Consider exploring: 

• Enterprise Management Incentives (EMI) 
• Company Share Option Plans (CSOP) 
• Share Incentive Plans (SIP) 

Review eligibility criteria and reporting requirements before implementing any scheme. 

Timing and Compliance Essentials 

Getting incentives right requires early planning and clear documentation. 

Checklist: 

• Register your UK company for corporation tax within three months of starting to trade. 
• Put processes in place to track qualifying expenditure. 
• Meet all HMRC deadlines for claims and reporting. 
• Consider the impact of international tax rules, including transfer pricing and double tax treaties. 

R&D Tax Next Steps 

Planning your UK expansion with tax incentives in mind can help you maximise reliefs and avoid surprises later. Contact us via info@kirkrice.co.uk to discuss your plans with an experienced adviser. 

Please note: This article is correct as at the publication date. The answers are given for general guidance only and specific advice should be taken before acting on any of the suggestions made. The information is based on current tax legislation which may change in future. Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of relief from taxation are subject to change. The Financial Conduct Authority does not regulate tax planning.