This article provides an example of the utilisation of RDEC for accounting periods beginning on or after 1 April 2024, for commentary see 'Utilising and paying RDEC' in D1.417. For commentary on RDEC for earlier periods see 'Utilisation and payment of RDEC' in D1.435A and, for an example, D1.435B.
It is assumed that for both years the main corporation tax rate is 25%, the small profits rate is 19% and the RDEC percentage is 20%. The company's PAYE cap (see D1.414A) is £2m in year 1 and £1m in year 2. All losses from year 1 are group relieved and are not carried forward to year 2.
| Year 1—loss making | £³¾ |
| Turnover | 9 |
| RDEC (at 20%) | 2.40 |
| R&D costs | (12) |
| Other costs | (7.5) |
| Profit/(loss) before tax | (8.10) |
| CT due | Nil |
Step 1
Discharge any corporation tax liability — no liability so RDEC to carry forward to Step 2 is £2.40m.
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