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KB Home / Tax Return Production / How do I enter a Research and Development Expenditure Credit (RDEC)...

How do I enter a Research and Development Expenditure Credit (RDEC) on my CT600?

Article ID: 2621
Last updated: 13 Aug, 2020

The research and development expenditure credit (RDEC) replaced the large company scheme in April 2016 to continue to encourage investment in R&D. A large company can claim a taxable credit on qualifying R&D expenditure, up to 2 years after the end of the accounting period it relates to.In addition, small and medium sized enterprises (SME's) can also claim the RDEC if they have been subcontracted to provide R&D work by a large company or if they have received a grant for their R&D project. The resulting credit can be used to reduce the current corporation tax liability or, if no current liability exists, can be used against other outstanding tax or VAT liabilities with any remaining credit being repayable to the company.

From 1 April 2013, the tax credit is 10% of the qualifying expenditure.

From 1 April 2015, the tax credit is 11% of the qualifying expenditure.

From 1 January 2018, the tax credit is 12% of the qualifying expenditure.

From 1 April 2020, the tax credit is 13% of the qualifying expenditure.

CT600 (version 3) from 2015 onwards 

For periods starting on or after 1 April 2015, there is a Wizard feature to assist with the calculation and claiming of RDEC

SimpleStep mode

  1. Go to Tax reconciliation.
  2. Select the Wizard icon to the right of box 530.
  3. Enter the amount of expenditure in the box Qualifying RDEC expenditure for the period in which it was incurred. The tax credit percentage will be completed automatically.
  4. Press Next Step on the bottom right corner of the screen.
  5. Complete the seven step process to calculate the amount of RDEC, ensuring that Step 3 has been completed to restrict the RDEC to the PAYE expenditure.

HMRC Forms mode

  1. Go to CT600 Core > Page 6.
  2. Select the Wizard icon to the right of box 530.
  3. Enter the amount of expenditure in the box Qualifying RDEC expenditure. The tax credit percentage will be completed automatically.
  4. Press Next Step on the bottom right corner of the screen.
  5. Complete the seven step process to calculate the amount of RDEC, ensuring that Step 3 has been completed to restrict the RDEC to the PAYE expenditure.

CT600 2008 form

SimpleStep mode

  1. Go to CT600 full > Tax reconciliation.
  2. Enter the full amount of the tax credit in box 87. This will automatically be offset against profits. If there is a trading loss, it should appear in box 89 creating a payable tax credit figure.
  3. If there is a trading loss, select Overpayments and repayments > Repayments for the period > Enter the net tax credit being repaid to the company in box 143. This would be the figure calculated following the seven step process to generate the RDEC. Select the Help section for details on this process.

HMRC Forms mode

  1. Go to CT600 > Full > Page 5.
  2. Enter the full amount of the tax credit in box 87. This will automatically be offset against profits. If there is a trading loss, it should appear in box 89 creating a payable tax credit figure.
  3. If there is a trading loss, select page 7. Enter the net tax credit being repaid to the company in box 143. This would be the figure calculated following the seven step process to generate the RDEC. 

Note: After entering the details for the CT600, please remember that the resulting amount of credit is taxable and will therefore need to be included in the accounts either as other operating income or credited against the R&D expenditure.

For further information read Research and Development Expenditure Credit Seven Step Manual on the HMRC website.

Article ID: 2621
Last updated: 13 Aug, 2020
Revision: 8
Views: 2509
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Also listed in
folder Tax Return Production -> CT600 Corporation Tax Return

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