Here's how to make an RDTI claim for the 2020/2021 income year.
If you are a business with a tax agent and a standard balance date (which means your income year ends on the 31st March), your claim will be for R&D activity undertaken during the period from 1 April 2020 to 31 March 2021.
The timeline below uses this example to show the steps to claim:
Year 2 (2020/2021) example for a business with a tax agent and a 31 March income year end
- If your business does not have a tax agent’s extension of time, the date for submitting the tax return is usually 7 July 2021.
- Does your business have a different income year end? Click here for examples of your key dates.
- NOTE: an extension of time may be granted if you don’t have one, please contact the RDTI team before your income tax return is due.
Submit your RDTI application for General Approval
After you have checked that you are enrolled for the RDTI in myIR, the first step is to submit an application for general approval (or GA) of your R&D activities. Applying for in-year general approval is free, and it is intended to provide you with certainty that your R&D activities are eligible for the RDTI.
This part of the claim process is focussed solely on your R&D activities. You can submit a general approval application in anticipation of planned R&D activities or in respect of R&D activities that you have already undertaken during the 2020/2021 income year. The standard deadline for filing an RDTI application for general approval is 7 May 2021, as shown in the above example.
For Year 2 of the RDTI scheme and all following years, you can submit multiple general approval applications during the year. Some businesses like the certainty of getting approval for their activities at the start of the year. If your R&D programme pivots during the year, you can submit another application for approval. You can file as many general approval applications as you need to cover all projects that you have undertaken. If you expect that your activities will take longer than a year to complete, you may also apply for general approval for up to a maximum of three years.
What does the application for General Approval look like in myIR?
If you have enrolled for the RDTI, you will find the application for ‘General Approval’ in your myIR account. You will be required to submit details about your R&D activities. The activity description will link back to the RDTI definition of core and supporting R&D activities and you will need to explain how your activity meets the tests.
- Preview the myIR screenshots here, to help you prepare your submission. Note that this preview is a guide only – your application for general approval must be electronically filed in myIR.
- Check out the guidance for completing your application for general approval on IR’s website.
- Still have questions? Contact the RDTI team.
A dedicated review team within Callaghan Innovation is working with Inland Revenue to assess all general approval applications. This team makes a recommendation to Inland Revenue on the eligibility of the R&D activities that you are undertaking. It’s important to also note that, for tax privacy reasons, the team assessing your application won’t be your usual Callaghan Innovation contact (if you have one).
You must obtain general approval for your R&D activity to be able to claim for the associated expenditure at the end of the 2020/2021 income year.
Opt to apply for a General Approval Application Extension (only for 2020/2021)
The standard deadline for filing an RDTI application for general approval is 7 May 2021, as shown in our above example.
However, an extension is available if your business was affected by COVID-19 so that it isn’t reasonable for you to meet the filing date for your 2020/2021 general approval. The COVID-19 outbreak and its effects may have disrupted your ability to plan or do eligible R&D, or appropriately obtain the necessary information or advice to apply for general approval (you will need to self-assess this and keep a note of your circumstances).
This deadline date extension is available for the 2020/2021 income year only, and takes effect from 1 September 2020 to 30 September 2021. The extension means you now have until the 7th day of the fifth month after the end of your income year to submit your general approval application. In the above example that means you can submit your general approval application on 7 August 2021 instead of 7 May 2021.
Submit your 2020/2021 Income Tax Return
The next step comes at the end of the year when you prepare your income tax return in myIR. Your income tax return will include a few extra fields to allow you to calculate the amount of income tax payable, as the RDTI is a tax credit that reduces the total amount of income tax that you owe.
If you are a business with a tax agent and a standard balance date, your 2020/2021 income tax return will be due on 31 March 2022, as shown in the above example.
Submit your 2020/2021 Research & Development Supplementary Return
The final step in the process is the submission of your RDTI supplementary return. If you have enrolled for the RDTI, you will find the ‘Research and Development Supplementary Return’ in your myIR account (it must be filed electronically).
The supplementary return from Year 2 (2020/2021) and for following years just requires you to provide details about the money you spent on your eligible R&D activities. You will need to supply the amounts for different expenditure types like salary costs, contractor costs and depreciation.
What does the RDTI supplementary return look like in myIR?
- Preview the myIR screenshots here, to help you prepare your submission. Note that this preview is a guide only – your RDTI supplementary return must be electronically filed in myIR.
- Your pre-approved R&D activities from your general approval application will pre-populate your supplementary return for 2021 and later years.
- If there has been a material change to your pre-approved activities there is a box on the supplementary return for you to describe these changes.
- Still have questions? Contact the RDTI team.
The supplementary return can be filed up until 30 days after your income tax return – in the above example that is 30 April 2022. However, it is recommended that you file early to avoid missing the deadline.