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What are the R&D tax credit rates for the RDEC scheme?

The RDEC scheme offers a tax credit of 13%. This enables companies to claim back up to 11p (after the deduction of Corporation Tax) for every £1 spent on qualifying research and development (R&D) activities. Unlike the scheme for SMEs, this rate remains the same whether you are profit- or loss-making.

The R&D expenditure credit (RDEC) scheme is primarily for large companies. These are businesses with 500 or more employees and either more than €100m turnover or €86m gross assets.

Some SMEs also claim R&D tax credits via RDEC for a portion, or all, of their R&D expenditure. This is because the rules for the SME R&D tax credit scheme include some restrictions for grant-funded projects, for example.

How much is RDEC worth

The R&D tax credit rate for RDEC is worth up to 11p for every £1 spent on qualifying expenditure.

An RDEC claim is paid out in the form of a taxable credit of 13% of your identified qualifying expenditure. As the credit is taxable, it results in a cash benefit of 11% after tax. There is a fixed offset procedure for the credit. It is calculated as a deduction from your tax bill, or if there is no tax payable, the net amount can be claimed as cash.

You can see how this is calculated here:

RDEC calculations illustration
How RDEC is calculated

The new RDEC rate

From 1 April 2020, the government increased the RDEC rate from 12% to 13%. This increase in generosity is good news for large companies – as well as the SMEs who also use the RDEC R&D tax credit scheme. For more information about the history of R&D tax credits, view our timeline.

What the RDEC rate increase means for large companies

This change will increase the value of R&D tax credit claims made by large companies – and the growing number of SMEs using RDEC. Find out how much a claim will be worth from 1 April 2020.

Our team of chartered tax advisers, sector specialists and former HMRC inspectors advise large, complex businesses on the RDEC R&D tax incentive and deal with HMRC on their behalf. We also help grant-funded SMEs claim R&D tax credits using RDEC. As well as managing the claim process for large companies, we also provide a consultancy service. Typically, this is used by larger businesses that are already claiming R&D tax credits and ask us to focus our expertise on a specific aspect of their claim process – for example, record-keeping.

A seat on the HMRC Research & Development Communication Forum means we benefit from policy-level insight. Our constantly evolving process is line with HMRC expectations and results in a maximised claim for our clients. If you need any help preparing either an RDEC claim for a large business or an R&D tax credit claim for an SME speak to us.

Have a question for our team?

It can be complicated to submit an R&D tax credit claim to HMRC’s exacting standards.

Get in touch with our team of chartered tax advisers, chartered accountants, lawyers, sector specialists, former HMRC inspectors and quality assurance experts to access expert guidance for your claims.

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