Research and Development tax credits

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This tab of the R&D or Creative industry relief and tax credits section allows a claim to either R & D tax credit or Creative industry tax credit to be made.

Research and Development Tax Credit

  • Surrender trade losses for R&D Tax Credit?‘ Tick the box to enable the data entry fields appear.
  • ‘Exempt from the cap on payable tax credit?’ – from 1/4/2021 the payable tax credit is subject to a cap. However there are exemptions and exceptions that may apply which will mean no cap is applied. Tick this box if any apply. See https://www.gov.uk/government/publications/preventing-abuse-of-research-and-development-tax-relief-for-small-and-medium-sized-enterprises for more information
  • ‘Enhanced expenditure from trade (A)’ This field shows the enhanced R&D expenditure (expenditure plus the additional deduction) as entered in the trading profits screen.
  • ‘Unrelieved trade losses for period (B)’ This field shows the unrelieved trading losses for the period from the trading profits screen.
  • ‘Surrenderable loss (lower of A and B)’ This field shows the lower of the unrelieved trading losses (A) and the surrenderable loss (B).
  • Rate‘ Enter the rate at which the tax credit is surrendered. This rate can be edited as required.
  • ‘Calculated R and D tax credit’ – this amount is the surrenderable loss multiplied by the rate.
  • ‘PAYE and NIC liabilities for the period’ – enter the amount of PAYE and NIC liabilities for the period. This applies with effect from 1/4/2021 and is required to enable the capped amount to be applied to the calculated credit. If the period straddles the 1/4/2021 only enter the relevant amount of PAYE and NIC liabilities that apply from 1/4/2021 to the end of the period.
  • ‘R & D tax credit (before 1/4/2021)’ – this field will only appear where the return period straddles the 1/4/2021. This is the amount of the apportioned calculated tax credit relating to the number of days from the start of the period to 31/3/2021.
  • ‘R & D tax credit capped (after 1/4/2021)’ – this field will only appear where the return period straddles the 1/4/2021. This is the amount of the apportioned calculated tax credit relating to the number of days from 1/4/2021 to the end of the period. This amount will be capped where appropriate. The cap is £20,000 plus 300% of the PAYE and NIC liabilities as entered. 
  • ‘Total calculated R & D tax credit’ – this field will only appear where the return period straddles the 1/4/2021. This is the total tax credit for the period.
  • ‘Credit set off against other liabilities’ – this is automatically populated by Taxfiler. Other liabilities relate to payable tax in respect of Loans to Participators, Controlled Foreign Companies, Bank levy and Bank surcharge. This is a requirement for the correct population of the new CT600L supplementary pages.
  • ‘R & D tax credit capped’ – this field will only appear where the return period starts on or after 1/4/2021 and where the ‘Exempt from the cap on payable tax credit?’ has not been ticked. This field will show the calculated capped credit.
  • Payable R & D tax credit’ This field shows the calculated payable R & D tax credit.

Override calculated Tax Credit

It is possible to override the calculated tax credit, in which case the computation will not show the calculation derived from the section above. You will need to attach a computation of the tax credit to the Tax Return.

  • Override calculated tax credit?’ Tick the box to override the calculated tax credit.
  • Losses surrendered for R&D tax credit‘ Enter the losses surrendered.
  • R&D tax credit‘ Enter the R&D tax credit that is claimed.