UK R&D Tax Relief & RDEC Calculation Examples

The R&D Tax Relief for UK small and medium-sized enterprises (SMEs) has the same calculation for all companies applying to the program but your companies corporation tax has an effect on the return. Below we have outlined three scenarios with the same R&D expenditures but the difference is a company in a loss position, breakeven, and profit-making for the year-end. We have also taken a look at how to calculate the RDEC expenditure for large corporations. (Please note that the calculations are a rough estimate of credit or cash refunds your business can avail. However, there are some additional calculations that may affect this credit or refund. This tool should be used as a guideline only and not in the place of professional, accurate consultation.)

R&D Tax Relief Loss Making Scenario

Total Expenditures = £100,000.00
R&D Enhancement = £130,000.00
Total R&D Enhancement = £230,000.00
Loss At Year-End = £50,000.00
Total Benefit To Company = £26,100.00

R&D Tax Relief Breakeven Scenario

Total Expenditures = £100,000.00
R&D Enhancement = £130,000.00
Total R&D Enhancement = £230,000.00
Breakeven For Year-End
Total Benefit To Company = £18,850.00

R&D Tax Relief Profit Making Scenario

Total Expenditures = £100,000.00
R&D Enhancement = £130,000.00
Total R&D Enhancement = £230,000.00
Profit To Year-End = £50,000.00
Total Benefit To Company = £11,600.00

RDEC Expenditure Calculation

Staff Costs = £100,000.00
Subcontractor Costs = £50,000.00 * 65% = £32,500.00
Consumable Costs = £100,000.00
Total Expenditure *13% = £30,225.00

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