CREC063200 - Expenditure credit calculation: examples: multi-period production

Company B is producing a video game. 

AP1 

Description 

Amount (£) 

Total expenditure to date 

200,000 

Core expenditure to date 

190,000 

Excluded expenditure to date 

15,000 

Non-UK core expenditure to date 

25,000 

Qualifying expenditure to date in last period in which a claim was made 

n/a 

Note: ‘to date’ means up to the end of the accounting period to which the claim relates. 

Step 1 - Find the amount of relevant global expenditure 

Relevant global expenditure must be expenditure which is brought into account as part of the separate trade, is core expenditure and is not excluded expenditure. 

Assuming that all of Company B’s core expenditure has been brought into account as part of total expenditure, and that all excluded expenditure is core expenditure, relevant global expenditure is: 

£190,000 - £15,000 = £175,000 

Step 2 – Deduct non-UK expenditure from the result of step 1 

Assuming that all of Company B’s non-UK expenditure is core expenditure but is not also excluded expenditure: 

£175,000 - £25,000 = £150,000 

UK expenditure is therefore £150,000 

Step 3 – Find the lesser of UK expenditure and 80% of relevant global expenditure 

UK expenditure (the result of step 2) = £150,000 

80% of relevant global expenditure = £175,000 x 80% = £140,000 

The lesser amount (£140,000) is ‘qualifying expenditure to date’. 

Step 4 – Deduct ‘qualifying expenditure to date’ in the last period in which the company claimed a credit from ‘qualifying expenditure to date’ in the current period 

Because this is the company’s first claim for this production, there is no need to do anything at this step. ‘Qualifying expenditure for the period’ is equal to ‘qualifying expenditure to date’: £140,000. 

Step 5 – Multiply ‘qualifying expenditure for the period’ by the relevant percentage 

Because Company B is making a video game, the relevant percentage is 34%. 

The amount of credit to which Company B is entitled for AP1 is £140,000 x 34% = £47,600


AP2 

Description 

AP1 amount (£) 

AP2 amount (£) 

Total (£) 

Total expenditure 

200,000 

150,000 

350,000 

Core expenditure  

190,00 

130,000 

320,000 

Excluded expenditure 

15,000 

10,000 

25,000 

Non-UK core expenditure 

25,000 

20,000 

45,000 

Qualifying expenditure to date in last period in which a claim was made 

N/A 

140,000 

- 

To date’ means up to the end of the accounting period to which the claim relates, therefore in the second AP it includes all the expenditure from both AP1 and AP2.  

Step 1 - Find the amount of relevant global expenditure 

Making the same assumptions as in AP1, relevant global expenditure is: 

£320,000 - £25,000 = £295,000 

Step 2 – Deduct non-UK expenditure from the result of step 1 

£295,000 - £45,000 = £250,000 

UK expenditure is therefore £250,000. 

Step 3 – Find the lesser of UK expenditure and 80% of relevant global expenditure 

UK expenditure (the result of step 2) = £250,000 

80% of relevant global expenditure = £295,000 x 80% = £236,000 

The lesser amount (£236,000) is ‘qualifying expenditure to date’. 

Step 4 – Deduct ‘qualifying expenditure to date’ in the last period in which the company claimed a credit from ‘qualifying expenditure to date’ in the current period 

The most recent period in which Company B claimed a credit was the previous period, AP1. ‘Qualifying expenditure to date’ in AP1 was £140,000. 

£236,000 - £140,000 = £96,000 

‘Qualifying expenditure for the period’ is therefore £96,000. 

Step 5 – Multiply ‘qualifying expenditure for the period’ by the relevant percentage 

The relevant percentage is still 34%. 

The amount of credit to which Company B is entitled for AP2 is £96,000 x 34% = £32,640