Knowledge bank
Accounting & tax interaction
How the relief is implemented in the accounts and CT600
6 answers
- Can HMRC use my R&D tax credit to pay off other tax debts? Yes. HMRC can set any repayable sum, including an R&D credit, against CT, PAYE or VAT debts or a contract settlement, without asking first — but it must tell you in writing once it has.
- How and when do I actually receive R&D tax relief money? HMRC aims to process 85% of claims within 40 days, but "processed" can mean a query or a compliance check, not just payment. You also have to be a going concern to be paid at all.
- How do I account for an R&D tax relief claim in my company's accounts? Essential read The R&D credit's tax treatment depends on the scheme: the merged scheme credit is taxable, the ERIS/SME credit is not. It's recognised under ordinary current tax rules, not a grant standard.
- How does group relief interact with an R&D claim? The merged scheme lets you surrender the credit itself to a group company. SME/ERIS works differently: choose how much loss to claim as credit, and surrender the rest as group relief.
- What does it mean for an R&D tax credit to be "above the line" or "below the line"? The merged scheme's credit sits above the line as taxable income, netted down by a notional tax deduction. The SME/ERIS credit sits below the line and is never gross taxable income at all.
- What is the PAYE and NIC cap on the R&D tax credit? The payable credit is capped at £20,000 plus three times the PAYE and NIC of your R&D staff. The excess isn't lost outright, but what happens to it differs sharply by scheme.
Get in touch