Unconnected means the subcontractors are at arm’s length and there is no relationship between the companies or shareholders.

Connected parties includes companies who may have common shareholders/control or are in a group relationship. 

Relief on unconnected subcontracted costs is restricted to 65%.

If the company and the subcontractor are connected, the actual costs of the work undertaken by the subcontractor can be claimed.

If an unconnected subcontractor is willing to disclose the actual costs of the R&D, both parties can elect to be treated as if they are connected.