This article provides an example of the utilisation of RDEC for accounting periods beginning before 1 April 2024. For commentary see 'Utilisation and payment of RDEC' in D1.435A. For accounting periods beginning on or after 1 April 2024 see D1.417 and, for an example, D1.418.
It is assumed that for both years the corporation tax rate is 25% and that the RDEC percentage is 20%. The total expenditure on workers is £1.9m 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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