There are several ways in which R&D tax credit benefits can be realised; the method of recovery varies depending on the claimant’s tax position and profitability.
Put simply, your benefit from the RDEC application will be approximately 10.5%. This benefit is consistent for both profit-making and loss-making organisations.
The RDEC scheme offers a tax credit of 13% of your qualifying expenditure. This tax credit is taxable at the Corporation Tax rate of 19%. As such, the actual benefit received is 10.5%. This is detailed in the example below:
RDEC Tax Credit Rate
HMRC recently announced an increased in the RDEC rate from 12% to 13%, effective from 1 April 2020. A timeline of the RDEC rate can be seen below:
Date | Payable Credit |
---|---|
01/04/2013 | 10% |
01/04/2015 | 11% |
01/04/2018 | 12% |
01/04/2020 | 13% |
How the Credit is Applied:
The government have set out the following steps detailing how to apply the RDEC credit:
Gov.UK (2020), Claim Research and Development (R&D) expenditure credit, Available At: https://www.gov.uk/guidance/corporation-tax-research-and-development-tax-relief-for-large-companies