The pre-1 April 2024 scheme for large companies is called the R&D Expenditure Credit (RDEC) and operates in a different way to that for SMEs. It is essentially a taxable grant, set at 20% of qualifying expenditure.
The RDEC also applies to SMEs carrying out contract or subsidised R&D up to 31 March 2024.
Qualifying costs under the RDEC scheme are:
- staffing costs
- consumable materials
- software
- externally provided workers
- a limited range of payments to subcontractors
- clinical trials volunteers
- data licences and cloud computing
In most cases it can be offset against corporation tax but large companies without taxable profits can claim it as a cash payment, net of a ‘withholding tax’ at the same rate as corporation tax, too.
From 1 April 2024, a single merged R&D scheme applies.