SolvedCREC063200 | Expenditure credit calculation: examples: multi-period production
From HM Revenue & Customs · Creative Industries Expenditure Credit Manual
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