Research and development or film relief tax credits section (CT600)

This screen is accessed via the Data Input tab within the tax return. Use this section to claim Research & Development relief, Film Relief or R&D / Film Tax Credits.

Only companies which are based in the UK, and that pay Corporation Tax, are eligible to apply for Research and Development (R&D) Tax Credits.

There are two schemes for R&D tax relief. One is for SMEs and the other is for Large Companies, both are available within Taxfiler by IRIS.

This section has three tabs:

  • Enhanced expenditure (includes Film Tax Credit)

  • R & D Tax Credit

  • R & D Expenditure Credit

For further explanation on claiming Research and Development Expenditure Credit read the following article: https://www.taxadvisermagazine.com/article/taking-credit

Enhanced expenditure

This tab of the R&D or Creative tax credits section allows input of enhanced expenditure totals and Creative Tax Credit.

R&D and film relief enhanced expenditure

  1. Select Claim for films expenditure? if claiming films expenditure.

  2. Select Claim by SME or SME subcontractor? if the claim is made by an SME or SME subcontractor.

  3. Select Claim made by large company? if the claim is made by a large company.

  4. Enter the R&D or films enhanced expenditure.

  5. Enter the R&D enhanced expenditure of SME on work sub-contracted from a large company.

  6. Tick the box R & D claim notification form submitted? if the relevant claim notification form has been submitted to HMRC.

  7. Tick Additional information form submitted? if the additional information for has been submitted to HMRC.

  8. R & D expenditure qualifying for SME R&D relief - this shows the amount of Research and Development expenditure for the period. This applies to accounting periods starting on or after 1/4/2023.

Film tax credit

  • Unrelieved trading losses available for surrender – this field shows the current value of unrelieved trading losses, brought through from the Trade Summary tab

  1. Enter the Loss surrendered for Film Tax Credit amount that is to be surrendered for Film Tax Credit.

  2. Enter the Film Tax Credit claimed amount of tax credit claimed.

Enhanced expenditure must also be entered on the adjustments to trade profit in the trading profits section from the data input tab in the tax return.

Research and Development Tax Credit

This tab of the R&D or Film Relief and tax credits section allows calculation of the R&D Tax Credit.

  1. Select Surrender trade losses for R&D Tax Credit? to surrender trade losses for an R&D Tax Credit.

  2. Tick the Exempt from the cap on payable tax credit? if the company is exempt from the application of the cap. For more information, click here.

    • Enter the amount of Total expenditure on externally provided workers. This cannot exceed 15% of the total research and development expenditure incurred.

  3. Tick the R & D intensive SME if the company is entitled to claim the higher rate of tax credit of 14.5% for expenditure incurred fro 1/4/2023.

  • Enhanced expenditure from trade (A) – this field shows the enhanced R&D expenditure 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 surrenderable loss.

  1. Enter the Rate at which the tax credit is surrendered. This rate can be edited as required.

  • R&D tax credit – this field shows the calculated R & D tax credit.

Override calculated tax credit

It is possible to override the calculated tax credit, in which case 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.

  1. Select Override calculated tax credit? to override the calculated tax credit.

  2. Enter Losses surrendered for R&D tax credit.

  3. Enter the R&D tax credit that is claimed.

Above The Line R&D Tax Credit (RDEC)

This page provides calculation of the Research and Development Expenditure Credit (RDEC), also known as Above The Line Tax Credit.

RDEC and the current large company scheme co-exist until 31 March 2016, after which time the existing large company scheme will only continue for expenditure incurred prior to that date until such expenditure is treated as deductible in a CT computation. Once a company has claimed RDEC for the first time, it has effectively elected into RDEC and the election is irrevocable.

SMEs will be able to claim the RDEC in the same circumstances as they can currently claim under the existing large company scheme. As with loss making large companies SMEs will now be able to claim a payable credit under the RDEC subject to certain restrictions and set offs on such claims.

  1. Ensure 'Claim Above The Line Research & Development Expenditure credit’ is selected. This will give access to additional fields which need to be completed.

  2. Enter the value for PAYE and Class 1 NIC liabilities for the period as this determines the cap on the claim.

Above The Line R&D expenditure credit

  1. Select Claim Above The Line Research & Development Expenditure Credit? to indicate a claim for credit under the RDEC scheme.

Additional tax due on expenditure credit

Research and Development Expenditure Credit (RDEC) is a taxable credit. The adjustment to trade profits is automatically calculated.

It is possible to override the calculated tax credit, in which case 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

  1. Enter the Qualifying expenditure for the period.

  2. Select the Rate from the drop-down list, that applies to the expenditure. This is 12%/13%/20% for large companies and 49% for ring-fenced trades.

  • Calculated tax credit – Taxfiler by IRIS will display the maximum calculated tax credit for period.

  1. Enter any Tax credit b/fwd and/or surrendered from group from other group companies.

  • Research and Development tax credit (Box 530) – Taxfiler by IRIS displays the total tax credit, including brought forward and surrendered tax credits.

  1. Enter the Amount to offset against Corporation Tax for this period.

  • Amount remaining after set-off – Taxfiler by IRIS displays the amount remaining after set-off.

  • Calculated credit less CT at main rate – Taxfiler by IRIS will calculate the net R&D tax credit as reduced by the amount of Corporation Tax payable at the relevant rate.

  • Lower of amount remaining and net expenditure credit – Taxfiler by IRIS will show the lower of the tax credit remaining after set-off and the calculated credit reduced by CT.

  1. Enter the total amount of applicable PAYE and Class 1 NIC liabilities for the period for relevant workers. The credit that can be claimed in a period is capped by the PAYE/NIC of the R&D staff (with no restriction for time spent on qualifying R&D activity) and externally provided workers provided by the same group as the claimant (restricted to the proportion of time spent on qualifying R&D activity).

  • Expenditure credit carried forward to next period – Taxfiler by IRIS displays the amount which exceeds the cap. This should be carried forward and treated as an expenditure credit for the next accounting period.

  • Amount available for set-off – Taxfiler by IRIS displays the net amount of capped RDEC available for set-off.

  1. Enter the Amount to set against Corporation Tax for other periods.

  2. Enter the Amount surrendered to group to other group companies.

  3. Enter the Amount set off against other company liabilities to HMRC.

  • Payable Research & Development Tax Credit – Taxfiler by IRIS displays the final payable tax credit.