ExpertMedium2 marksMultiple Choice
ACCA · Question 09 · Corporation tax liabilities
Section A
BioGenix Ltd is a qualifying Small and Medium-sized Enterprise (SME) for Research and Development (R&D) purposes. During the year ended 31 March 2024, it incurred £100,000 of qualifying R&D revenue expenditure.
What is the total deduction BioGenix Ltd can claim against its trading profits for this expenditure?
Section A
BioGenix Ltd is a qualifying Small and Medium-sized Enterprise (SME) for Research and Development (R&D) purposes. During the year ended 31 March 2024, it incurred £100,000 of qualifying R&D revenue expenditure.
What is the total deduction BioGenix Ltd can claim against its trading profits for this expenditure?
Answer options:
A.
£100,000
B.
£130,000
C.
£186,000
D.
£230,000
How to approach this question
Identify the current SME R&D enhancement rate (86% for expenditure from 1 April 2023). Add the enhancement to the original expenditure to find the total deduction.
Full Answer
C.£186,000✓ Correct
For qualifying R&D expenditure incurred on or after 1 April 2023, an SME can claim an enhanced deduction of 86% in addition to the actual expenditure. Therefore, the total deduction is the original £100,000 plus the enhancement of £86,000 (£100,000 x 86%), totaling £186,000.
Common mistakes
Using outdated enhancement rates (e.g., 130%) or only claiming the enhancement amount rather than the total deduction.
Practice the full ACCA TX — Taxation Practice Exam 2
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