Glossary · UK
What is Research and Development Expenditure Credit (RDEC)?
A 13% above-the-line tax credit for large companies and some SMEs on qualifying R&D expenditure, introduced as part of the post-2023 R&D reforms.
Full Definition
The Research and Development Expenditure Credit (RDEC) is a UK tax relief for companies incurring qualifying R&D expenditure. The RDEC rate is 13% for accounting periods beginning on or after 1 April 2023 (increased from 11%). RDEC is an above-the-line credit, meaning it appears in the company P&L as income and is then set off against the Corporation Tax liability. If the credit exceeds the CT liability, the excess is repayable in cash (subject to PAYE and NI caps for related employees). The net benefit after 25% CT is approximately 9.75%. From 1 April 2024, a merged R&D scheme replaced both the SME enhanced deduction and RDEC for most companies; the merged scheme uses the RDEC mechanism at 20% for qualifying expenditure (or 15% for eligible contracted-out work). Qualifying expenditure includes staff costs, consumables, software, subcontractors, and clinical trial volunteers.