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Article ID: 3394
Last updated: 14 Nov, 2024
From 1 April 2023, the rate used for calculating the payable tax credit reduced from 14.5% to 10% for the R&D SME scheme. HMRC have issued guidance within the Research and Development manual (CIRD90500) on how to calculate the total payable tax credit when the accounting periods straddle 1 April 2023. Once the enhanced expenditure has been calculated at the applicable rate, for which TaxCalc provides a wizard, the loss available to surrender can be entered within CT600 Core > Losses, Management expenses, NTLRDs and NTLIFAs > Trading losses. If the loss available to surrender for R&D SME tax credits is less than the total enhanced expenditure, then it is the total loss figure that is apportioned according to the number of days in each financial year (FY). Example For the accounting period ended 31 December 2023 Company A incurred a loss (after enhanced expenditure relief) of £67,000 The payable tax credit will be calculated as follows: FY 2022 - £16,520 ((67,000/365)*90) * 14.5% = £2,395.40 FY 2023 - £50,479 ((67,000/365)*275) * 10% = £5,047.90 Note: Once the loss is apportioned per period, the amount should be compared to the enhanced expenditure amount for that period, and the loss surrendered for the tax credit should be restricted if necessary. Please see examples in the Research and Development manual (CIRD90500) The new combined R&D tax relief scheme will apply to periods starting on or after 1 April 2024.
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