How do I enter R&D enhanced expenditure (for SMEs) on my CT600 - periods starting before 1 April 2024

R&D enhanced expenditure relief is available for periods starting before 1 April 2024. For periods starting after 1 April 2024 please refer to:

How do I claim for research and development relief from 1 April 2024

When you make a claim for research and development (R&D) enhanced expenditure for small and medium sized enterprises (SME's), you need to enter figures to adjust the computation to receive relief for the additional 130% (86% from 1 April 2023) of qualifying costs. 

If there is a loss, you may also need to make a claim to surrender any losses, to receive the 14.5% (10% from 1 April 2023) credit.

If you are claiming the research and development expenditure credit (RDEC) for large companies, or you are claiming for an SME that has sub-contracted for a large company, please read our knowledgebase article on How do I enter a Research and Development Expenditure Credit (RDEC) on my CT600?

From 6th April 2021, HMRC require entries for SME enhanced expenditure payable credit claims to be entered within Research and Development supplementary pages. The entries for enhanced expenditure relief and possibly payable credit, can be made in SimpleStep or HMRC Forms mode.  

CT600 (Version 3 for periods commencing after 1 April 2015)

SimpleStep mode

1. Go to CT600 Core> CAs and Enhanced Expenditure > Enhanced expenditure
2. Tick box 650 (SME)
3. If you have already calculated it, enter the total enhanced expenditure in box 660  or use the wizard to assist- in which case enter the amount of qualifying expenditure. The amount of qualifying expenditure entered should already be adjusted for the amounts allowable as explained in HMRC's guidance on costs you can claim. After entering the amount of qualifying expenditure, you will see that the applicable uplift rate has been applied to calculate the total value of enhanced expenditure. 130% (86% from 1 April 2023) is the additional deduction made in the computation as 100% has already been claimed in the profit and loss account.

Computational adjustment

This is where the difference between the 100% that you claimed in your accounts as the expense, and the total calculated enhanced expenditure (230%) (186% from 1 April 2023) is entered. The additional 130% (86% from 1 April 2023) is claimed as an adjustment to profit in the computation.

1. Go to CT600 Core > Trade and professional income > Tax adjusted profit/loss  other adjustments.
2. Enter the figure for Research and development to adjust the profit chargeable to tax as required. If you used the wizard previously, then this will be populated automatically.

Surrendering the loss

1. Go to CT600 > Losses, Management expenses, NTLRDs and NTLIFAs > Trading losses record.
2. Enter the figure for Loss Surrendered for R & D tax credit. (the maximum amount available to surrender is the lower of the trading loss and the total enhanced expenditure.)
3. By clicking on the link Complete R&D Supplementary pages, you will be taken to  > Research and Development (R&D) Relief for SMEs
4. You will see (*from April 2022)
   • *Box L166 has been populated with the R&D expenditure amount entered within the enhanced expenditure wizard within the trade income adjustments (or from Box 660)
   • *Box L167 will need to be ticked if the PAYE cap restrictions do not apply and Box L167A should be used to enter the expenditure on externally provided workers
   • *Boxes L168 to L169A should be used to enter the PAYE information if the exceptions do not apply.
   • If the company qualifies to be an R&D intensive company, tick the box at the top of the R&D Payable Tax Credit section
   • the Loss surrendered and Tax credit % has been automatically populated and you are able to over-write the default rate (10% from April 2023 onwards), if necessary. Box L170 will be automatically calculated
5. In box L175 enter any amounts for other liabilities (referring to boxes 480 to 505 in the Calculation of tax outstanding section) that will be offset and reduce the payable tax credit.

Claiming repayment for the credit

1. Go to Overpayments and repayments > Repayments for the period
2. The amount of the tax credit will automatically populate box 875

HMRC Forms mode

1. Go to CT600 > Core > Page 7.
2. Go to the section for R&D or creative enhanced expenditure.
3. Tick box 650 (SME).
4. If you have already calculated it, enter the total enhanced expenditure in box 660  or use the wizard to assist- in which case enter the amount of qualifying expenditure. The amount of qualifying expenditure entered should already be adjusted for the amounts allowable as explained in HMRC's guidance on costs you can claim. After entering the amount of qualifying expenditure, you will see that the rate of 230% (186% from 1 April 2023) has been applied to calculate the total value of enhanced expenditure. 130% (86% from 1 April 2023) is the additional deduction made in the computation as 100% has already been claimed in the profit and loss account.

Computational adjustment

This is the where the difference between the 100% that you claimed in your accounts as the expense, and the total calculated enhanced expenditure (230%) (186% from 1 April 2023) is entered. The additional 130% (86% from 1 April 2023) is claimed as an adjustment to profit in the computation.

1. Go to CT600 > Computations > Tax adjusted profit/loss – other adjustments.
2. Enter the figure for R&D enhanced expenditure to adjust the profit chargeable to tax as required. If you used the wizard previously, then this will be populated automatically.

Surrendering the loss

1. Go to CT600 > Losses, Management expenses, NTLRDs and NTLIFAs > Trading losses record.
2. Enter the figure for Loss Surrendered for R & D tax credit. (the maximum amount available to surrender is the lower of the trading loss and the total enhanced expenditure.)
3. By clicking on the link Complete R&D Supplementary pages, you will be taken to > Research and Development pages > Page 1. Navigate to Page 4 to the section ‘Small and medium-sized enterprise (SME) R&D.
4. You will see (*from April 2022)
   • *Box L166 has been populated with the R&D expenditure amount entered within the enhanced expenditure wizard within the trade income adjustments (or from Box 660)
   • *Box L167 will need to be ticked if the PAYE cap restrictions do not apply and Box L167A should be used to enter the expenditure on externally provided workers
   • *Boxes L168 to L169A should be used to enter the PAYE information if the exceptions do not apply.
   • the Loss surrendered and Tax credit % has been automatically populated and you are able to over-write the default rate (10% from April 2023 onwards), if necessary. Box L170 will be automatically calculated.
5. In box L175 enter any amounts for other liabilities (referring to boxes 480 to 505 in the Calculation of tax outstanding section) that will be offset and reduce the payable tax credit.

Claiming repayment for the credit

1. Go to CT600 Core > Page 10 > Repayments for the period covered by this return
2. The amount of the tax credit will automatically populate box 875

For further information read Corporation Tax: Research and Development tax relief for small and medium sized enterprises on the HMRC website.

* *Foe expenditure incurred from 1 April 2023, loss making companies whose R&D expenditure constitutes at least  40% (30% from 1 April 2024) of total expenditure will be able to claim 14.5%.