ExpertHard2 marksMultiple Choice
ACCA · Question 10 · Corporation Tax Liabilities
Section A: Objective Test
NovaTech Ltd is a loss-making Small and Medium-sized Enterprise (SME) that incurred £100,000 of qualifying Research and Development (R&D) expenditure in the year ended 31 March 2024. The company wishes to surrender its surrenderable loss for an R&D payable tax credit.
Assuming the standard SME R&D rules for expenditure incurred after 1 April 2023 apply, what is the maximum R&D payable tax credit NovaTech Ltd can claim?
Section A: Objective Test
NovaTech Ltd is a loss-making Small and Medium-sized Enterprise (SME) that incurred £100,000 of qualifying Research and Development (R&D) expenditure in the year ended 31 March 2024. The company wishes to surrender its surrenderable loss for an R&D payable tax credit.
Assuming the standard SME R&D rules for expenditure incurred after 1 April 2023 apply, what is the maximum R&D payable tax credit NovaTech Ltd can claim?
Answer options:
A.
£14,500
B.
£18,600
C.
£33,350
D.
£10,000
How to approach this question
Apply the post-April 2023 SME R&D rates: 86% enhancement on qualifying expenditure, and a 10% payable tax credit rate on the surrenderable loss.
Full Answer
B.£18,600✓ Correct
For R&D expenditure incurred on or after 1 April 2023, the SME enhancement rate is 86% (reduced from 130%). The total deduction is therefore 186% of the qualifying expenditure.
Enhanced expenditure = £100,000 x 186% = £186,000.
Assuming the company has sufficient losses to surrender the full amount, the payable tax credit rate is 10% (reduced from 14.5% for non-R&D intensive SMEs).
Payable credit = £186,000 x 10% = £18,600.
Common mistakes
Using the pre-April 2023 rates (130% enhancement and 14.5% credit).
Practice the full ACCA TX — Taxation Practice Exam 1
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