What’s the correct way to do accounting for R&D tax credits under RDEC?

The credit that you receive under the RDEC scheme can be claimed as taxable income. This is because RDEC is considered an above the line credit. That means you can use the credit as income in calculating your accounting profit, before your tax liability is calculated.

Your gross RDEC R&D tax credit is considered an above the line entry in your income statement for accounting purposes. It is commonly listed as 'other income'. This accounting treatment is not mandatory and it’s worth talking with your accountant, auditor or R&D tax credit advisor about the best treatment.

As with the SME R&D tax scheme, if you’re not sure how much your RDEC R&D credit is or are still working out your narrative or claim, you can still file your accounts and later update HMRC with a supplementary CT600. Companies often file their annual accounts, then make a supplementary filing when the R&D claim is ready to send to HMRC.

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Accounting is one of the most important pieces of the puzzle to maximise a risk-free R&D tax credit claim. We provide a free accounting period to help you organise your finances for your company and make sure your R&D claim fully complies with the RDEC R&D tax credits scheme for safer, faster payment.

F6S can help with your R&D claim