RDEC Benefits
The R&D expenditure credit was first introduced in 2013 and phased in to replace the Large Company (LC) scheme by 2016. The RDEC payment is an above the line cash credit for your business, currently payable at the rate of 20% of all of your eligible R&D expenditure.
RDEC is taxable at the normal Corporation Tax, while some of the main RDEC benefits include:
- RDEC is easy to forecast as they are independent of the company’s tax position.
- The RDEC figure is shown above the line in your accounts, making it more visible to aid future R&D decisions.
- Companies that are in a loss-making position receive a cash credit, which is one of the significant RDEC benefits over the old large company scheme that existed.
- It is applicable to all eligible innovations and R&D efforts outside of the arts, humanities, and social sciences.
To learn more about RDEC benefits and the RDEC scheme in general, contact us via the button below.
RDEC 7 Steps:
We specialise in guiding businesses through the complex RDEC scheme and ensuring that they receive the maximum benefit.
RDEC Rate
The RDEC rate is the same for all large companies and is delivered as a percentage relating to all qualified expenses. Meanwhile, the fact that it’s paid net at the normal Corporation Tax rate of 19% means that every £1 spent on eligible costs will earn an 11p tax credit.
While the RDEC rate has increased several times since its introduction, the following figures are easy to follow:
- For the period of 1/4/2015 to 31/12/2017, the rate was 11%.
- For the period of 1/1/2018 to 31/3/2020, the rate was 12%.
- For the period of 1/1/2020 to 31/3/2023, the rate was 13%.
- Since 1/4/2023, the RDEC rate has been set to 20%.
To gain a better understanding of the RDEC rate and how it can impact your accounts, click the button underneath now.
RDEC Qualifying Activity
Under the RDEC scheme, the RDEC qualifying activity is defined by the Department for Business, Energy and Industrial Strategy. This is often referred to as the BEIS guidelines.
Generally speaking, though, it can be expected that the R&D items will count as RDEC qualifying activity under the RDEC scheme if:
- Are part of a development in science or technology.
- Relate to the creation of new products, processes or services.
- Relate to the modification of existing products, processes or services.
- Meet the standard BEIS guidelines definition.
RDEC qualifying activity can cover costs incurred from the start to the end of the project. To learn more or confirm that your activities are eligible, click the button below.
RDEC Qualifying Expenditure
The R&D Expenditure Credit qualifying expenditure under the RDEC scheme is typically applicable to eligible projects from when the technical or scientific uncertainty begins to when it is resolved.
The RDEC rate of 20% is applicable to following eligible R&D cost categories:
- Salaries (including company pension and NI contributions)
- Consumable items including water, gas, and electricity.
- Externally Provided Workers
- Contributions to Independent Research
- Software Licences
For more information on RDEC R&D Tax Relief and how RDEC could benefit your business, contact our experts now.
