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Article ID: 3394
Last updated: 17 Sep, 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. It is this 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 The full example can be found within the HMRC guidance link above. TaxCalc now automatically calculates the apportioned loss for you. The new combined R&D tax relief scheme will apply to periods starting on or after 1 April 2024.
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