Under this scheme, an eligible company can claim a tax credit which is equivalent to 13% (20% from 1 April 2023) of its qualifying R&D expenditure.
It is an ‘above the line’ credit which is visible in the accounts and taxable. The tax credit is then deducted from the company’s corporation tax liability, or, paid as a cash payment from HMRC.
Companies claiming under the RDEC scheme can expect to see an effective benefit of approximately 10.5% (i.e. 10.5p for every £1 of qualifying R&D expenditure).
From 1 April 2023, for a company paying corporation tax at 25%, the effective benefit will significantly increase to 15%.
This benefit remains the same whether the company is profit or loss making.