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R&D Tax treatment
Hello, please can someone help as I am getting confused.
SMEs
In AccountancyTube it says that for SMEs we can deduct 230% off the R&D cost from TTP. However in ACCA articles & Kaplan book I see that we need to use 130% and not 230%. Please can anyone comment on it?
Also, in AccountancyTube it says that if a company makes a loss then we can claim tax credit in the following way: to deduct 14.5% of the amount lower of trading loss or 230% off the R&D cost.
Large companies
In regards to large companies AccountancyTube says to deduct 11% . In other sources, they are talking about the above the line method & it is anywhere near 11%.
Please help
Hi
You are allowed 100% deduction for the expenditure. Plus an additional relief of 130% for allowable R&D expenditure, I.e computer software, materials and staff cost.
For large companies, there 2 ways you can do it which will give you the same answer. 100% deduction for expenditure against profits, then find 11% of allowable expense for R&D, ADD this to taxable profits, calculate corporation tax, then deduct 11% of R&D in which you calculated above against CT liability.
2nd way is to find 11% of R&D and times by 81%, then deduct this amount against tax liabilty.
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