R&D or Creative Industry Relief and tax credits section (CT600)

This section is used to claim Research & Development relief, Film Relief or R&D/Film tax credits. Only companies based in the UK, 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.

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

Refer to the HMRC Corporation Tax form for Company Tax (CT600) guidance if needed (opens in a new tab).

  1. Open the required tax return, then select the Data input tab.

  2. If the required section is listed, select it and skip the next step. If not, select Add a new section.

  1. On Choose a section to add, under Deductions & reliefs, select R&D or Creative Industry Relief and tax credits.

    If the section is crossed through, it has already been added to the tax return. To adjust it the existing values, close the window and select the section on the Data Input tab.

  1. The section has 3 tabs. Complete as follows, then select Save changes.

Enhanced expenditure tab

This tab is used to enter enhanced expenditure totals and Creative Industry Tax Credit.

Enhanced expenditure must also be entered on the adjustments to trade profit section of the tax return.

R&D and Creative Industry Relief enhanced expenditure

Select if the claim is made by an SME or SME subcontractor, including a SME contractor to a large company.

Select if the claim is made by a large company.

Enter the R&D or films enhanced expenditure.

Enter the expenditure amount. Include claims for film, television, animation, video games, theatre, orchestra or museums and galleries expenditure.

Enter the enhanced expenditure of an SME on work that is sub-contracted from a large company.

Creative Industry Tax Credit

Select the type of industry from the list.

Shows the current value of unrelieved trading losses, brought through from the Trade Summary tab

Enter the amount of the loss that is to be surrendered for Creative Industry Tax Credit.

Enter the amount of tax credit claimed.

R & D Tax Credit tab

This tab is used to calculate the R&D Tax Credit.

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

Shows the enhanced R&D expenditure as entered in the trading profits screen.

Shows the unrelieved trading losses for the period from the trading profits screen.

Shows the surrenderable loss.

Edit the rate at which the tax credit is surrendered.

Shows the calculated R & D tax credit.

Override calculated tax credit

You can override the calculated tax credit. If this is done, 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.

  • Override calculated tax credit? – select to override the calculated tax credit.

  • Losses surrendered for R&D tax credit – enter the losses surrendered.

  • R&D tax credit – enter the R&D tax credit that is claimed.

Above The Line R&D Tax Credit tab

This tab 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.

Above The Line R7D expenditure credit

Ensure you select box ‘Claim Above The Line Research & Development Expenditure credit. Additional fields need to be completed. Enter the value for PAYE and Class 1 NIC liabilities for the period as this determines the cap on the claim.

Step 1

Enter the qualifying expenditure for the period.

Enter the amount of expenditure incurred by an SME on work sub-contracted to it by a large company. This field will not be editable if there is a value in Qualifying expenditure as HMRC validations do not permit it.

Enter the amount of expenditure of an SME which has been capped or subsidised. This field will not be editable if there is a value in Qualifying expenditure as HMRC validations do not permit it.

Calculated total of the expenditure as entered in the previous fields.

Select the rate from the list that applies to the expenditure. This is 12% for large companies and 49% for ring-fenced trades.

Shows the maximum calculated tax credit for the period.

Enter the amount of any expenditure credit brought forward from the previous period. Any amounts from a previous period are automatically brought forward.

Shows the total tax credit, including brought forward and surrendered tax credits.

Shows the notional tax brought forward used to discharge the CT liability for the period before using the tax credit arising in the period. Enter the full amount of the notional tax restriction brought forward from the previous period in the Corporation Tax charge restriction b/fwd field.

Shows the total tax credit available to discharge the CT liability for the period including the Step 2 restriction b/fwd and surrender from group set against CT.

Shows the amount of tax credit being used to discharge the current period CT liability. Note that this value represents the amount of the CT liability less any amount of income tax deducted from income.

Step 2

Shows the amount of the tax credit remaining after set-off against the CT liability for the period.

The net R&D tax credit as reduced by the amount of Corporation Tax payable at the relevant rate.

The Calculated credit less CT at main rate plus any Step expenditure credit brought forward not used to discharge any corporation tax liability for the current period.

Enter the amount of the Step 2 notional tax charge restriction brought forward form the previous period.

Enter the amount to be surrendered to other group companies.

Automatically calculated when the amount remaining after set-off is greater than the Calculated credit less CT at main rate.

Enter the amount of the notional tax charge being surrendered to a group company.

Automatically calculated based on the of Corporation Tax charge restriction b/fwd less Step 2 restriction b/fwd set against CT liability plus Corporation Tax charge on the calculated credit less Amount of CT Charge surrendered to group member.

Step 3

Shows the lower of the tax credit remaining after set-off and the calculated credit reduced by corporation tax.

Enter the amount of any expenditure credit brought forward from the previous period.

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). Enter the total amount of applicable PAYE and Class 1 NIC for relevant workers.

Shows the amount which exceeds the cap. This should be carried forward and treated as an expenditure credit for the next accounting period.

Step 4

Shows the net amount of capped RDEC available for set-off.

Enter the amount required to be set off against corporation tax for other periods.

Step 5

Enter the amount to be surrendered to other group companies.

Step 6

Automatically calculated. Other liabilities relate to payable tax in respect of Loans to Participators, Controlled Foreign Companies, Bank levy and Bank surcharge. This is a requirement for the correct population of the new CT600L supplementary pages. Any relevant liabilities will be discharged using expenditure credit first before settling the liability using the Research & Development tax credit.

Enter the amount required to set-off against other company liabilities to HMRC.

Step 7

Enter the amount of any tax credit that is not payable because the company is not a going concern at the time the credit is being claimed.

Displays the final payable tax credit.