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HOME / SERVICES & EXPERTISE / Large company Research and Development Tax Expenditure (RDEC)

Large company Research and Development Tax Expenditure (RDEC)

capital-allowances

Large company for R&D tax purposes, may be eligible to claim Research and Development Expenditure Credit (RDEC) when working on R&D projects.

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 12% of your qualifying R&D expenditure from 1st January 2018 and 13% from 1st April 2020.

HOW THE NUMBERS WORK

An RDEC claim is a taxable ‘above-the-line’ credit of 13% 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 13% = £13,000

Net RDEC amount claimable: £13,000 – (£13,000 x 19%) = £10,530

After tax benefit: £10,530 / £100,000 = 10.53%

SMEs with a turnover less than €100m, may be eligible to claim SME Research and Development Expenditure Credit.

FREE R&D ASSESSMENT

    OVER £68 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.

      RELATED R&D NEWS

      Bhimal Hira
      Bhimal Hira

      020 7309 2222

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