HMRC internal manual

Corporate Intangibles Research and Development Manual

CIRD89705 - R&D Tax reliefs: R&D expenditure credit (RDEC) Scheme: overview

Finance Act 2013 introduced a stand-alone credit to be brought into account as a receipt in calculating the profits of large companies for research and development (R&D) expenditure incurred on or after 1 April 2013 known as the Research and Development expenditure credit (RDEC). The RDEC scheme does not alter the way qualifying activity is identified or how qualifying expenditure is calculated. It is only the method of giving the relief that has changed.

RDEC and the current large company super deduction scheme will co-exist until 31 March 2016. The existing large company scheme rules and benefits will remain unchanged until it ceases in April 2016. After this date the large company scheme will only continue for expenditure incurred prior to that date until such expenditure is treated as deductible in a CT computation (para 28 Sch 15 FA2013). Once a company has claimed RDEC for the first time, it has effectively elected into RDEC and the election is irrevocable.

The new legislation is contained at CTA2009 Chapter 6A with consequential amendments to FA1998, FA2007 and CTA2010. Part 13 of CTA2009 is amended to reflect the abolition of the Large Scheme from 1 April 2016.

For profit making companies the credit discharges corporation tax liability that the company would have to pay. Companies with no corporation tax liability will benefit from the RDEC either through a cash payment or a reduction of tax or other duties due.

Claims by an SME {#}

The introduction of RDEC does not affect claims made under the SME scheme. However, SMEs will be able to claim the RDEC in the same circumstances as they can currently claim under the existing large company scheme. As with loss making large companies SMEs will now be able to claim a payable credit under the RDEC subject to certain restrictions and set offs on such claims


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Features of the RDEC scheme

  • A large company cannot generally claim expenditure on subcontracted R&D as qualifying expenditure CIRD84200.
  • Subject to certain conditions, a large company can claim payments made as contributions to independent research as qualifying expenditure CIRD82200.
  • Under the RDEC scheme as with the large company scheme any subsidies received are not deducted from the qualifying R&D expenditure CIRD89000.
  • There are provisions for the recovery of relief where a company receives a refund of some qualifying R&D expenditure (CIRD87500).

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Claims process (including details of changes to amended returns from 1 April 2019 and the introduction of the CT600L from 6 April 2021)

Chapter 6A CTA 2009 S104B

Claims will be made in the Company Tax Return or amended return and subject to the normal time limit for submitting a return or an amended return i.e. 2 years from the end of the accounting period.

Entries will be required on the CT600 at any of box numbers 87, 89, 93 and 143 depending on whether the credit is discharging liability or gives rise to a payable credit or a combination of both. No entries are however required at boxes 99 to 102(unless a claim for enhanced expenditure is also required for the period). Please see FAQs below for guidance on CT600 box entries

Link to CT600 Guidance 

For accounting periods ending on or after 1 April 2015 claims will be made in the new Company Tax Return. Entries will be required in boxes 530,545,570, 605 and 880 as detailed in question 6 at CIRD 89890. The address for guidance in filling out the new Company Tax Return is as follows;


From 1 April 2019 all R&D claims which are made in an amendment to a return need to include a completed CT600 and a corporation tax computation.

Most amendments to a return are made through the Corporation Tax Online Service (also known as the COTAX gateway - details are on page 130001 of the COTAX Manual [COM]) and already include a completed CT600 and a corporation tax computation.  Those claims are not affected by this change. However, where the Corporation Tax Online Service is used to make an amendment to a return but a company does not include both a completed CT600 and a corporation tax computation no valid claim will have been made until both documents have been received. Any missing document can be included as an enclosure to an email.

All claims which are not made through the Corporation Tax Online Service must include a completed CT600 and a corporation tax computation. These items can be included as an enclosure to an email.

All claims in respect of which the CT600 and/or the corporation tax computations have not been provided electronically through the Corporation Tax Online Service will, for the purposes of the content in CIRD 80525 under the heading ‘Once filed’, be treated as not having been made electronically.

From 6 April 2021 all companies which are claiming RDEC are required to complete and submit a supplementary form, the CT600L, with their company tax return CT600. Guidance on completing that form can be found on the HMRC Website here (HMRC website )

Companies which are claiming RDEC and have RDEC brought forward from earlier accounting periods may be affected by a service issue. Those companies should check here to see if they are effected and what to do if they are CT service issues page .HMRC anticipate that this ervice issue will be resolved in June 2021

A consequence of a claim to RDEC is an automatic election; therefore no formal election is required. However, the election to claim RDEC is irrevocable and once made it is not possible to change back to the large company scheme. So for companies who make a claim for RDEC before 1 April 2016, the ability to claim under the existing large company scheme ceases on the first day of the accounting period for which the RDEC claim is made.

S104B confirms that a company may not claim RDEC and for relief under Part 13 (additional relief for expenditure on research and development) in respect of the same expenditure.

SME companies can continue to claim either an enhanced deduction or a payable credit under the SME scheme but in addition can claim RDEC where the expenditure does not attract SME relief but instead qualifies under the large company scheme or RDEC scheme due to one of the specific exclusions from the SME scheme set out in CIRD89740.

Where a company has incurred qualifying R&D expenditure prior to 1 April 2013 and these costs have been held on the balance sheet the R&D benefit should be claimed under the large company scheme even if the release occurs after 1 April 2016.

At the end of the RDEC guidance there are Notes to R&D expenditure credit (RDEC) and four worked examples: CIRD89900.