RDEC Above-the-Line R&D Credit Calculator

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%.

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.

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.

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.

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.

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.

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.

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.