R&D expenditure

R&D expenditure lists all Research and development expenditure either entered in Profit and loss for the period or added directly from this page.

Note: Use Add on this page to enter capitalised Research and development costs.

Capitalised Research and development

To add an item of capitalised Research and development, select Add.

This will open Add new R&D expenditure. Enter on this page:

  • A description of the expenditure.
  • The trade to which the expenditure relates.
  • The R&D claim type, from the drop-down menu.
  • The amount of the expenditure, in each period in a long period of account or where there is a rate change.

  • The amount of any Subsidised expenditure included in periods of account starting before 1 April 2024 (where the R&D Claim type is Enhanced relief - incurred by SME). The Qualifying R&D expenditure will be calculated.

  • The Qualifying expenditure type and, where relevant, the Expenditure analysis type (where the R&D Claim type is either RDEC credits, RDEC SME subsidised/capped or RDEC - subcontracted to SME. These entries will be used to add the relevant iXBRL tags in the tax computation.

Research and development expenditure from Profit and loss

To analyse one of these amounts, highlight the relevant row and click Edit. This will open Edit R&D expenditure.

Note:

When entering Research and development expenditure credits in Profit and loss, you should ideally enter the amount net of tax credits. However, for each amount you allocate from Profit and loss you will need to specify, using the radio buttons, if it is:

  • Gross and a separate credit in P&L account, or
  • Gross but no separate credit in P&L account, or
  • Net

If Gross but no separate credit in P&L account is selected, this will result in a period specific adjustment addition to the relevant trade to reflect the fact that the RDEC is taxable.

For existing records first opened in v4.4, the default is set to Net and you should edit the setting if appropriate.

You may enter positive or negative amounts when allocating from an expense parent node (e.g. Administrative expenses) or its children and grandchildren in Profit and loss. You may only enter positive amounts if allocating from an income parent node (e.g. Investment income) or its children and grandchildren. Total net negative amounts will be restricted since relief is available for expenditure, not income.

Income/ expense type, Description and Business activity are populated from Profit and loss, and cannot be amended here.

Use the drop-down menu to select the R&D claim type.

Allocated from P&L account (- gross) cannot be amended on this page. To override this, use Total amount incurred for the period.

In a long period of account use Total Amount incurred for the period to show how much R&D expenditure falls into each accounting period. If there is a rate change, use the Amount incurred in the period before/after <dd/mm/yyyy> boxes to show how much R&D expenditure applies at each rate.

Enter the amount of any Subsidised expenditure included in periods of account starting before 1 April 2024 (where the R&D Claim type is Enhanced relief - incurred by SME). The Qualifying R&D expenditure will be calculated.

Enter the Qualifying expenditure type and, where relevant, the Expenditure analysis type (where the R&D Claim type is either RDEC credits, RDEC SME subsidised/capped or RDEC - subcontracted to SME. These entries will be used to add the relevant iXBRL tags in the tax computation.

Where the R&D Claim type is either RDEC credits, RDEC SME subsidised/capped or RDEC - subcontracted to SME, Total net amount incurred for the period and, if there is a rate change, Net amount incurred in period before/after <dd/mm/yyyy> are displayed and calculated. The calculated amount depends on whether the amount allocated from Profit and Loss is Gross or Net. If Net, these amounts will be the same as Total amount incurred for the period and, if there is a rate change, Net amount incurred in period before/after <dd/mm/yyyy>.

To see any Research and development adjustments, go to the relevant trade and click Edit for that trade. To review the expenditure entered at Profit and loss, click on the Adjustments from P&L figure. To review the adjustment, click on the Add/deduct period specific adjustments figure.

Go to the R&D Claims tab for the relevant trade to see a summary of the total Research and development claims made in that trade. Go to the R&D Expenditure Credits tab for the relevant trade and enter the appropriate amounts in each section.

See also: 

R&D Claims and R&D Expenditure Credits} in UK trades