R&D Tax Credits

What are R&D Tax Credits?

Research and development expenditure credit (RDEC) is a form of R&D tax relief designed to benefit larger businesses that aren’t eligible for SME R&D relief.

It provides a way to discharge liabilities, if you make a profit, or receive a cash payment if you make a loss and therefore don’t have corporation tax to pay.

How are R&D Tax Credits calculated?

RDEC is calculated at 12% of qualifying R&D expenditure incurred. If you made a loss, you can use the credit to cover the liability; if you made a profit, it will come as a cash payment.

It was launched in 2016 to replace the large company scheme and, like all R&D tax reliefs, is intended to encourage innovation.
Businesses across a range of sectors can claim it – not just those in obviously tech-led fields – as long as the project or projects they’re claiming for meet strict criteria.

  • Did it set out to achieve an advance in science and technology?
  • Did you discover and attempt to overcome uncertainty?
  • Was the solution you came up with one that another expert in your field couldn’t easily have worked out?

You might be able to claim things like costs for those working directly on the R&D project in question, project consumables and distribution costs.

SMEs which have done R&D work on behalf of a bigger firm, as a subcontractor, can also claim RDEC.

Talk to one of our experts today to find out if your project might be eligible for RDEC or for help making an R&D tax credit claim as part of your corporation tax return.

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