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R&D Tax Credit

R&D Tax credit rebate when company makes a small profit

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Hi all,

If a company makes a small profit of £5k and then has R&D expenditure that takes the position to a loss, is it still able to claim a tax credit / rebate even though it is the R&D itself that has created the loss?

For example if the operating profit is £5k less (130% expenses, where initial costs are already in the P&L) of £15k giving a "loss" of £10k - is a tax credit of 14.5% i.e £1,450 due on this?

Is my thinking correct here, or am I dissapearing up my own backside!!?? Thanks

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By daniel_
26th Oct 2018 12:59

The answer to your question is quite easy to find if you look at the Corporation Tax Manual.

" For expenditure incurred on or after 1 April 2015 the amount of the surrenderable loss is the lesser of:
* the amount of the unrelieved trading loss sustained in that period;
* 230% of the related qualifying R&D expenditure."

https://www.gov.uk/hmrc-internal-manuals/corporate-intangibles-research-...

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27th Oct 2018 10:34

So yes.

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