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Guidance

R&D expenditure credit for large companies and small and medium-sized enterprises

Find out if you can claim a Research and Development (R&D) tax credit for accounting periods beginning before 1 April 2024.

Updates to this page

From:
HM Revenue & Customs
Published:
1 January 2007
Last updated:
21 November 2024
Show all updates

  1. Added translation

  2. The 'Staff costs' section has been updated to include the treatment of bonuses and clarify that in some specific circumstances, you can claim for an element of administrative or support staff if they relate to an R&D project. Additional information has been added in step 2 of 'How to use the expenditure credit'. The information on when you must submit an additional information form has been updated from '1 August 2023' to '8 August 2023', and the text regarding voluntary submission of the additional information form before the mandatory date has been removed in step 2 of section 'Before you claim'.

  3. More information has been added about R&D expenditure credit (RDEC). How to calculate the expenditure credit, how to claim and how to use the expenditure credit have been updated. New sections have been added about expenditure credit rates, how to check what expenditure qualifies for expenditure credit, and what you need to do before you claim the expenditure credit for accounting periods beginning on or after 1 April 2023 and for claims from 1 August 2023.

  4. The 'Overview' section has been updated with information about when R&D expenditure credit can be claimed and to clarify what tax liabilities can be discharged with the credit.

  5. The email address in the 'When you cannot use the online service' section has been updated.

  6. The Research and Development Expenditure Credit rate changed from 12% to 13% on expenditure incurred on or after 1 April 2020.

  7. The Research and Development Expenditure Credit rate changed from 12% to 13%.

  8. Page has been updated with information about your expenditure when working out Research and Development Expenditure Credit

  9. You can now send supporting information for your RDEC claim using an online service - a link to the service and details of what you'll need has been added to this guidance.

  10. The Research and Development Expenditure Credit changed from 11% to 12% on 1 January 2018.

  11. First published.

There may be other steps you must complete before working out which relief you can claim. Check the steps you need to take to correctly claim R&D tax relief.

What R&D expenditure credit is

The R&D expenditure credit (RDEC) scheme can be used by some companies, with accounting periods beginning before 1 April 2024, to claim a tax credit for relief on R&D costs.

It can be used to pay: 

  • your company’s or other group companies’ Corporation Tax 

  • other tax liabilities such as VAT 

If there’s any credit left over after paying your tax liabilities, it may be paid to your company. 

If your tax credit is lower than the total spent on PAYE and National Insurance contributions the excess is carried forward to future accounting periods as an expenditure credit.

If your accounting period began on or after 1 April 2024, you must claim under the Research and Development merged scheme.

Who can claim

You should use the RDEC scheme if your accounting period began before 1 April 2024 and you’re a: 

  • large company 
  • small and medium-sized enterprise and you’re claiming for work that has been subcontracted to you 
  • small and medium-sized enterprise and you’ve received a notified State Aid for the project 
  • small and medium-sized enterprise and you’re claiming for costs that have been subsidised in some other way, such as a grant

If you do not meet these conditions you may be able to claim using the small and medium-sized enterprise tax relief scheme.

To claim your company must 

Expenditure credit rates

The tax credit is worked out as a percentage of your qualifying R&D costs. The rate on costs from:  

  • 1 April 2015 up to and including 31 December 2017 is 11%  

  • 1 January 2018 up to and including 31 March 2020 is 12%  

  • 1 April 2020 up to and including 31 March 2023 is 13%  

  • 1 April 2023 up to and including 31 March 2024 is 20%

What you need to do next 

If you’re a small and medium-sized enterprise and are eligible to claim RDEC, you may be able to apply for advance assurance to confirm if your claim will be accepted.

All companies and enterprises must check if you need to tell HMRC that you’re planning to claim this relief.

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