Large company Research and Development Tax Expenditure (RDEC)
WHO CAN CLAIM RDEC?
Research and Development Expenditure Credit (RDEC) is typically claimed by large companies. Other factors such as having received grant funding and carrying out R&D work for a large company can restrict access to the SME scheme.
RDEC is available if you are a large company for R&D purposes with:
- more than 500 staff
- a turnover of more than €100m or a balance sheet total more than €86m
R&D FOR SMEs vs RDEC
The main difference between R&D for SMEs and the Large company scheme (RDEC) is the costs which qualify under the RDEC scheme. Subcontracted expenditure cannot be claimed unless it has been directly undertaken by a scientific research organisation i.e. a charity, university, or an individual.
WHAT DOES THE RDEC SCHEME COVER?
For large companies and SME’s who fall under the RDEC scheme you will be able to claim a tax credit for 11% of your qualifying R&D expenditure up to 31st December 2017 and 12% from 1st January 2018.
HOW THE NUMBERS WORK
An RDEC claim is a taxable ‘above-the-line’ credit of 12% of the qualifying expenditure identified. This is subject to corporation tax at 19%, and is calculated as a deduction from your tax bill. If there is no tax payable, the net amount can be claimed as a cash credit.
A company has identified £100,000 of qualifying expenditure incurred on its R&D project.
The net RDEC amount claimable as a credit is calculated as follows.
Above the line credit: £100,000 x 12% = £12,000
Net RDEC amount claimable: £12,000 – (£12,000 x 19%) = £9,720
After tax benefit: £9,720 / £100,000 = 9.72%
SMEs with a turnover less than €100m, may be eligible to claim SME Research and Development Expenditure Credit.
FREE R&D ASSESSMENT
OVER £27 MILLION R&D CLAIMS SECURED
Jeffreys Henry LLP are specialists in hunting down every qualifying R&D cost and activity in your business.
YOUR SPECIALIST R&D TAX TEAM
For further information, or to arrange a free R&D assessment,
please contact Parminder Chattha (Head of R&D) or Virali Patel
on 0207 309 2222.
Ian Leigh
Parminder is a CTA qualified Corporate Tax Specialist with significant R&D Tax experience.
Parminder Chattha
Parminder is a CTA qualified Corporate Tax Specialist with significant R&D Tax experience.
Virali Patel
Virali specialises in Research and Development tax relief, an area which she has been solely focusing on since 2016.
