ExpertMedium2 marksMultiple Choice
ACCA · Question 10 · Corporation tax liabilities
Section A
'Algae-Plast Ltd', an SME biotech firm, incurred £100,000 of qualifying Research & Development (R&D) expenditure during the year ended 31 March 2024.
What is the total deduction Algae-Plast Ltd can claim against its trading profits for this R&D expenditure?
Section A
'Algae-Plast Ltd', an SME biotech firm, incurred £100,000 of qualifying Research & Development (R&D) expenditure during the year ended 31 March 2024.
What is the total deduction Algae-Plast Ltd can claim against its trading profits for this R&D expenditure?
Answer options:
A.
£100,000
B.
£130,000
C.
£186,000
D.
£230,000
How to approach this question
Identify the company size (SME). Apply the current SME R&D enhancement rate (86%) to the qualifying expenditure, and add it to the original expenditure.
Full Answer
C.£186,000✓ Correct
For an SME, qualifying R&D expenditure attracts an additional deduction of 86% (for expenditure from 1 April 2023). The total deduction is the original £100,000 plus the enhanced £86,000, totaling £186,000.
Common mistakes
Using the old 130% rate or confusing the SME scheme with the large company RDEC scheme.
Practice the full ACCA TX — Taxation Practice Exam 3
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