The Research and Development Expenditure Credit (RDEC) is a standalone credit that is brought into account as a receipt in calculating profits. RDEC was first introduced on 1st April 2013. The current RDEC rate stands at 11% of qualifying Research and Development (R&D) expenditure (previously increased from 10% on 1st April 2015).
From 1st January 2018, The RDEC rate will be increased to 12% of qualifying expenditure incurred on or after this date. Legislation will be introduced in Finance Bill 2017-18, amending section 104M of Corporation Tax Act 2009.
RDEC is available for all large companies incurring qualifying R&D expenditure. Small and Medium Sized Enterprises (SMEs) which receive certain types of funding for R&D projects are also eligible for the credit. From 1st January 2018, the increase in the rate to 12% will allow claimant companies to recover 9.72% of qualifying expenditure, based on a 19% corporation tax rate. This is an increase on the current net benefit of 8.91%.