RDEC Above-the-Line R&D Credit Calculator
Calculate the Research and Development Expenditure Credit (RDEC) for large UK companies and the new merged R&D scheme. RDEC rate is 20% from April 2023, creating a net benefit of 15% after corporation tax.
Frequently Asked Questions
What is RDEC?
RDEC (Research and Development Expenditure Credit) is the R&D tax relief scheme for large UK companies (those exceeding the SME thresholds). Unlike SME R&D relief, RDEC is an 'above-the-line' credit — it appears as income in the P&L, improving EBITDA visibility. The current rate is 20%.
What is the net benefit of RDEC?
The 20% gross credit is treated as taxable income, so the net benefit after corporation tax at 25% is 15% of qualifying R&D expenditure. At 19% corporation tax it's 16.2% net benefit.
What is the merged R&D scheme?
From April 2024, HMRC merged the SME and RDEC schemes into a single 'merged scheme' with a 20% credit rate for most companies. SME-intensive companies (R&D spend ≥40% of total costs) get an enhanced 27% credit rate.
What counts as qualifying R&D expenditure?
Qualifying costs include: staff costs (salaries, employer NIC, pension), subcontractors (65% of externally provided workers), consumables (materials used or transformed in R&D), computer software, and data/cloud costs from April 2023.
Can loss-making companies claim RDEC?
Yes — loss-making companies can surrender the RDEC credit for a cash payment, but the payable credit is capped at 75% of the gross credit (i.e., 15% of qualifying spend). PAYE/NIC caps also apply.
Is RDEC only for large companies?
Under the old regime, RDEC was for large companies (250+ staff or >€50m turnover/€43m assets). Under the merged scheme from April 2024, it applies to all companies, though SME-intensive companies can opt for the enhanced rate.
What is the PAYE cap on RDEC?
The payable RDEC credit (for loss-making companies) is capped at 3× the company's PAYE and NIC liability for the accounting period. This prevents companies with no UK employees from claiming large cash payments.
How do I claim RDEC?
Claim RDEC on the Corporation Tax return (CT600). The R&D expenditure must be included in the accounts. Claims must be made within 2 years of the end of the accounting period. Companies claiming for the first time must notify HMRC in advance.