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
- ‘Total expenditure on externally provided workers’ enter the amount of expenditure incurred on externally provided workers. This cannot exceed 15% of the total Research and Development expenditure incurred.
- From 6/4/2022 when the exemption applies the Total expenditure on externally provided workers box becomes visible. HMRC require a value to be entered to ensure the CT600L can be successfully filed online.
- ‘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 periods starting on or after 1/4/2021 and is required to enable the capped amount to be applied to the calculated credit.
- ‘Total PAYE and NIC liabilities of connected companies’ If the company is exempt from the application of the cap this field will not be seen. If not exempted from this box will be visible. Click on the Edit button alongside the field to add information relating to Connected companies:
- Employers PAYE reference (NNN/XXXXXX)’ enter the connected company’s employers PAYE reference.
- ‘PAYE and NIC liability’ enter the amount of PAYE and Class 1 Nic liability paid by the connected company.
- ‘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 box will show the calculated capped credit. It will automatically take into account the amount of Total PAYE and NIC liabilities of connected companies’ in calculating the capped credit.
- ‘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.
- ‘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 by entering an alternative amount of losses to surrender for tax credit. Only the losses surrendered can be overridden. This allows for the revised amount of losses to be taken into the main calculation under Unrelieved trade losses for period (B) which allows for the appropriate tax credit to be capped where applicable. the computation. 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.