How to determine my cash benefit?

Your cash benefit is based on whether you are profit making or loss making for tax purposes. The regime works by providing a ‘superdeduction’ of 130% (from April 2015) against your taxable profits. If you are loss making, you then have the option to surrender your loss (the lower of your loss or 230% of your R&D spend) for a cashback credit at 14.5%.

The examples below set out the cash benefit for a profit and loss maker assuming £50,000 of qualifying spend:

  • Assume £50,000 qualifying spend profit maker
  • Taxable profit 150,000
  • 130% superdeduction on £50,000 - 65,000
  • Taxable profit (after R&D superdeduction) 85,000

Calculation of cash benefit:

  • 20% Tax due on £150,000 without R&D superdeduction 30,000
  • 20% Tax due on £85,000 (following R&D superdeduction) 17,000
  • Cash tax benefit 13,000

Effective cash benefit rate on £50,000 qualifying spend 26%:

  • Assume £50,000 qualifying spend Loss maker
  • Taxable loss - 75,000
  • 130% superdeduction on £50,000 - 65,000
  • Taxable loss (after R&D superdeduction) - 140,000

Calculation of loss maker cashback:

  • Loss for the period 140,000
  • 230% superdeduction (£50,000 + 130%) 115,000
  • Surrender the lower of tax loss or 230% superdeduction at 14.5%: 16,675

Cashback claim benefit 16,675

  • Effective cash benefit rate on £50,000 qualifying spend 33.35%

Contact us on support@niftyforms.co.uk if you have any queries.

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