R&D large company tax relief—expenditure on or after 1 April 2016
For the latest New Development, see ND.1918.
For qualifying expenditure incurred on or after 1 April 2016, a large company may only claim a taxable R&D expenditure credit (RDEC) (sometimes called an above the line credit, as it is taxable)1. RDEC could be claimed by large companies on expenditure incurred on or after 1 April 2013 as an alternative to the enhanced deduction (see 'R&D large company tax relief—expenditure before 1 April 2016' below) but from 1 April 2016, the credit is the only available large company R&D relief.
The credit is calculated directly as 13% of qualifying R&D expenditure for the period (12% for expenditure incurred prior to 1 April 2020, 11% for expenditure incurred prior to 1 January 2018, and 10% for expenditure incurred prior to 1 April 2015 but on or after 1 April 2013)2. RDEC is not available to companies that are charities, institutions of higher education or any company as described by Treasury regulations3.
The payable credit is paid at a higher headline rate of 49% to companies in the oil and gas ring-fence. These companies have their profits taxed at 62% so the increased credit rate is therefore necessary to preserve the effective rate of relief and the incentive it brings4. It should be noted that despite the increase in the RDEC rate from 12% to 13% for expenditure incurred on or after 1