This case study is based on the examples provided by HMRC at CIRD 89900ff., updated for financial year 2020.

Facts:

Example 1:

Profitable

Example 2:

Loss-making

Expenditure

A

£10,000,000

£10,000,000

RDEC (A at 13%)

£1,300,000

£1,300,000

Current year corporation tax

£494,000

Nil

Total expenditure on workers

£300,000

£400,000

Prior years’ corporation tax

£100,000

£200,000

Other tax liabilities

£nil

£nil

Group relief?

No

No

RDEC paid as follows:

Step 1: Set against current year corporation tax

£494,000

Nil

Step 2: Cfwd to next period (Working 1)

Nil

£247,000

Step 3: Cfwd to next period (Working 2)

£506,000

£653,000

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