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D1.414A The PAYE cap for R&D credits from April 2024

The amount of payable credits under the R&D relief schemes is restricted by reference to the claimant company's PAYE and NICs liabilities. For accounting periods beginning on or after 1 April 2024, the restriction, or 'PAYE cap', is calculated in the same way for both RDEC and the R&D tax credit for loss-making R&D intensive SMEs. For earlier periods, different rules applied to each of the RDEC and SME tax credits. The post-April 2024 calculation is similar to the previous calculation for SME tax credits and is significantly more generous than for pre-April 2024 RDEC.

This article covers how the PAYE cap is calculated for accounting periods beginning on or after 1 April 2024 and the circumstances in which exemption from the PAYE cap applies. For earlier periods see D1.420 for SME tax credits and D1.435A for RDEC.

The cap applies as follows:

1. Ìý

   •ÌýÌýÌýÌý for RDEC, the cap is applied at Step 3 at 'Utilising and paying RDEC' at D1.417