R&D expenditure

R&D Claims List lists all Research and development expenditure either entered in and allocated from  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 a new R&D Claim. Enter on this page:

  • A description of the expenditure.
  • The trade to which the expenditure relates.
  • R&D Claim type from the drop-down list.
    Note: In accounting periods starting on or after 1 April 2024:

    • a company may make R&D claims under both the merged RDEC scheme and the loss-making R&D-intensive SME scheme. Accordingly, different R&D claims may be set up such that R&D claim type is RDEC credits for some and Enhanced relief - incurred by R&D-intensive SME for others. In accounting periods starting before 1 April 2024 a company may make R&D claims under either the original RDEC scheme or the SME R&D scheme.

    • the drop-down list items RDEC SME subsidised/capped and RDEC - subcontracted to SME are not available since they are not relevant to the merged RDEC scheme. In periods that straddle 1 April 2024, those items are available but no R&D expenditure in respect of them may be allocated to an accounting period starting on or after 1 April 2024.

  • Company is a going concern (only displayed in accounting periods starting on or after 1 April 2021 where R&D claim type is Enhanced relief - incurred by SME) is ticked by default. Refer to the help tip and untick the checkbox if the company is not a going concern when the R&D claim is made. If the checkbox is unticked, you will be unable to save the R&D claim. In such a scenario, tick the checkbox to allow the R&D claim to be saved and then select it in the RD Claims List screen and choose the Delete button. If the R&D claim was allocated from Profit and Loss, you must delete the record in the Profit and Loss screen.

  • The amount of the expenditure, in each period in a long period of account or where there is a rate change. In accounting periods starting on or after 1 April 2024, amounts entered must exclude any amount in respect of R&D undertaken outside the UK unless such R&D is permitted by virtue of CTA 2009, s1138A or, for Northern Ireland companies, by virtue of SI 2024/348.

  • 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 allocated from Profit and Loss

You can edit an amount of R&D expenditure allocated from Profit and Loss

To edit one of these amounts, highlight the relevant row and click Edit. This will open the R&D Claim for that amount.

Note:

When entering Research and development expenditure credits in Profit and Loss, you should remember that the tax credit R&D Expenditure Credit (RDEC) is taxable because it is an 'above the line' relief. 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 and a separate credit in P&L account is selected, you must ensure the Profit and Loss includes the taxable RDEC. This should be entered as a separate credit in Profit and Loss that will therefore increase the taxable profit by the amount of the taxable RDEC.

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.

If Net is selected, the amount allocated in Profit and Loss must be lower than the R&D expenditure debited to the P&L account by the amount of the taxable RDEC.

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 list to select the R&D claim type.

Note:

In accounting periods starting on or after 1 April 2024 a company may make R&D claims under both the merged RDEC scheme and the loss-making R&D-intensive SME scheme. Accordingly, different R&D claims may be set up such that R&D claim type is RDEC credits for some and Enhanced relief - incurred by R&D-intensive SME for others. In accounting periods starting before 1 April 2024 a company may make R&D claims under either the original RDEC scheme or the SME R&D scheme.

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. In accounting periods starting on or after 1 April 2024, amounts entered must exclude any amount in respect of R&D undertaken outside the UK unless such R&D is permitted by virtue of CTA 2009, s1138A or, for Northern Ireland companies, by virtue of SI 2024/348.

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

This summarises all R&D claims made in the period for this trade. The entries are used to complete the relevant boxes of the CT600 and CT600L.

Claim notification and additional information

This section is for reporting that:

  • an R&D claim notification form has been submitted
  • an R&D additional information form has been submitted

If a checkbox is ticked, the equivalent CT600 box will be populated.

These are digital forms which are available from .GOV.UK.

See Tell HMRC that you’re planning to claim Research and Development (R&D) tax relief by making a claim notification by making a claim notification for guidance including if and when a claim notification form must be submitted.

See Submit information to support your claim for R&D Corporation Tax reliefs for guidance about the additional information form including when it must be submitted.

The guidance is often updated and should be referred to ensure the latest guidance is being followed.

SME R&D enhanced relief or R&D enhanced relief: R&D-intensive SME

This section summarises all R&D claims where the R&D claim type is Enhanced relief - incurred by SME or, for accounting periods starting on or after 1 April 2024, Enhanced relief - incurred by R&D-intensive SME. For accounting periods starting on or after 1 April 2021, you will need to complete the following details, where applicable:

  • Exception to tax credit cap applies or Exception to R&D PAYE/NICs cap applies.

    This must be checked if the exception applies (meaning the R&D PAYE/NICs cap does not apply) (see CTA 2009, s1112E or, previously, s1058D). If you check this box, or leave it unchecked, you will need to enter other data, as explained below.

    In accounting periods starting on or after 1 April 2024, if a company is making R&D claims under both the loss-making R&D-intensive SME and RDEC schemes, then the exception to the R&D PAYE/NICs cap must either apply to both schemes or not apply to both schemes.

  • Total expenditure on externally provided workers

    You must enter an amount here if Exception to tax credit cap applies or Exception to R&D PAYE/NICs cap applies is checked. Use the help tip for guidance on what to enter here. The amount entered cannot exceed 15% of (Total) R&D expenditure incurred by SME or (Total) R&D expenditure incurred by R&D-intensive SME (see CTA 2009, s1112E(5)).

  • PAYE and NICs for which company is liable this period.

    You must enter an amount here if Exception to tax credit cap applies or Exception to R&D PAYE/NICs cap applies is unchecked (see CTA 2009, ss1112C and 1112D).

  • Number of employer PAYE references added.

    If you have completed PAYE and NICs for which company is liable this period, you must include the employer PAYE reference(s). Click the linked value to open the Employer PAYE reference(s): This company pop-up. In the pop-up, click Add and enter the PAYE reference in the row that appears. You can add a maximum of two employer PAYE references, e.g. the main PAYE reference and any separate PAYE reference for directors etc., and you must include both PAYE references if there are two.

  • Relevant PAYE and NICs liability of connected companies.

    If the company has any connected companies, you must enter the total PAYE and NICs liability of all the connected companies (see CTA 2009, ss1112C and 1112D).

  • Number of employer PAYE references of connected companies added.

    If you have completed Relevant PAYE and NICs liability of connected companies, you must include the PAYE reference(s) for each connected company. Click the linked value to open the Employer PAYE reference(s): Connected companies pop-up. In the pop-up, click Add and enter the PAYE reference in the row that appears. Each connected company may have more than one PAYE reference. You can add a maximum of 15 connected companies' PAYE references.

  • Surrendered for R&D tax credits or Surrendered for R&D tax credits by R&D-intensive SME.

    The payable tax credits rate varies. For accounting periods starting on or after 1 April 2023 and ending on or before 31 March 2024 the rate is 10% unless the R&D intensity condition is met when it is 14.5%. For accounting periods starting on or after 1 April 2024, only loss-making R&D-intensive SMEs can claim payable tax credits and the rate is 14.5%.

    In an accounting period in which the payable tax credits rate changes, you must enter the amount of the surrendered loss that is related to the period from which the new rate applies.

    In an accounting period ending on or after 1 April 2023 the amount entered cannot exceed the lower of: 

    • the amount calculated in the Maximum losses that may be surrendered for R&D tax relief section

    • the R&D PAYE/NICs cap, where it applies

  • SME payable tax credits used to discharge other company liabilities in this CTSA return or SME R&D payable tax credits used to discharge other company liabilities in this CTSA return.

    Use the help tip for guidance on what to enter here.

R&D expenditure credits (RDEC)

This section summarises all R&D claims where the R&D claim type is any of RDEC - subcontracted to SME, RDEC credits or RDEC SME subsidised/capped.

You must enter additional details at R&D Expenditure Credits

Total R&D credits and RDEC set off against liabilities in this return period

This summarises the data entered and/or calculated elsewhere.

R&D expenditure refunded

This summarises all R&D claims where the R&D claim type is R&D expenditure refunds. This R&D claim type cannot be selected in accounting periods starting on or after 1 April 2016.

This sets out the R&D Expenditure Credits made in the period for this trade. The entries are used to complete the relevant boxes of the CT600 and CT600L.

R&D expenditure credits (RDEC)

Enter the relevant details in each box, as appropriate. Use the help tips for guidance as to what to enter.

Note:

If the Net Corporation Tax liability is recalculated after you have entered data on this page, you will need to amend the entries for:

• Net Corporation Tax liability for this period (or Remaining net Corporation Tax liability for this period)

• Income Tax deducted from gross income (applicable to Remaining Net Corporation Tax liability)

• RDEC used to discharge other company liabilities in this CTSA return

Where an amount of RDEC is surrendered from or to any group company, click the relevant linked value to open the appropriate pop-up. In the pop-up, click Add and enter the group company's name, accounting period start and end date (if different to this company), unique tax reference and the amount surrendered in the row that appears. Add a row for each group company.

For accounting periods starting on or after 1 April 2024:

  • the R&D PAYE/NICs cap applies to the merged RDEC scheme in much the same way as it did to the R&D SME scheme and continues to apply to the loss-making R&D-intensive SME scheme. The R&D PAYE/NICs cap applies unless the exception to it applies. Where a company makes R&D claims under both the RDEC and loss-making R&D-intensive SME schemes, the PAYE/NICs cap is applied to the latter scheme first.

  • if a company is making R&D claims under both the loss-making R&D-intensive SME and RDEC schemes, then the exception to the R&D PAYE/NICs cap must either apply to both schemes or not apply to both schemes.

  • The rules restricting the extent to which contractor payments for R&D and payments for externally provided workers (EPWs) can qualify for R&D relief where the R&D activity takes place overseas that applied to the R&D SME scheme now also apply to the RDEC scheme.

RDEC carried forward

This summarises the RDEC to be carried forward. If there is any step 2 restriction c/f, some or all of it may be surrendered to one or more group companies. Click the relevant linked value to open the appropriate pop-up. In the pop-up, click Add and enter the group company's name, accounting period start and end date (if different to this company), unique tax reference and the amount surrendered in the row that appears. Add a row for each group company.

RDEC surrendered

This summarises the RDEC surrendered to all group companies entered elsewhere.