Companies Research and Development (R&D) Expenditure Credit (RDEC)
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Research and Development (R&D) Relief for Corporation Tax is provided by HM Revenue & Customs.
Introduced in April 2016, Research and Development (R&D) Expenditure Credit (RDEC) replaces the relief previously available under the large company scheme.
Large companies can claim a Research and Development Expenditure Credit (RDEC) for working on R&D projects. It can also be claimed by SMEs and large companies that have been subcontracted to do R&D work by a large company.
The credit is taxable. Depending on whether a company is profit or loss making the credit may be used to discharge the liability or result in a cash payment.
The credit is calculated at 13% of a company’s qualifying R&D expenditure
The credit is taxable. Depending on whether a company is profit or loss making the credit may be used to discharge the liability or result in a cash payment.
Costs that cannot be claimed include:
- The production and distribution of goods and services.
- Capital expenditure.
- The cost of land.
- The cost of patents and trademarks.
- Rent or rates.
To claim the relief the business needs to show how its project meets the definition of R&D.
RDEC can also be claimed by small and medium-sized enterprises (SMEs) that have been subcontracted to do R&D work by a large company or have received a grant or subsidy for their R&D project. Applicants might do this as an SME if that cannot claim R&D relief for SMEs.
The scheme is not subject to deadlines.
Tax credits can be claimed at the end of a companies' accounting period by submitting a tax return form. Interested parties are advised to contact HM Revenue & Customs for further information.
More details are available at the programme website.