The research and development expenditure credit (RDEC) was previously known as the “above the line tax credit”, and was introduced from 1 April 2013 for large companies as an alternative to the R and D tax credit regime. Prior to 1 April 2016 large companies could elect into RDEC or continue claiming R and D tax credits, but from 1 April 2016 RDEC replaced the tax credit regime for large companies only. The RDEC is designed to increase the visibility and certainty of UK R&D tax relief and provide greater financial and cash flow support to companies with no corporation tax liability.
Under RDEC there is no change to what is a qualifying activity or what is qualifying expenditure, but the way in which relief is given is different. Relief is given as a taxable credit calculated as a percentage of qualifying expenditure. Loss making companies are able to claim a payable credit, subject to certain conditions.