RDEC Scheme
The RDEC scheme is the UK’s research and development tax relief programme designed for large companies, as well as SMEs in certain circumstances. We explain how the RDEC scheme works, who can claim, what qualifies as eligible R&D activity, and how the rules changed when the schemes were merged on 1 April 2024.
What is the RDEC scheme?
The RDEC (Research and Development Expenditure Credit) scheme allows large companies, or eligible SMEs, to claim back a portion of their R&D expenditure.
Whether your business makes a profit or loss, the credit can either offset your Corporation Tax liability (for your company or another within the same Group) or be received as a cash payment.
Why claim RDEC Tax Credits?
R&D Tax Credits can give your company a significant financial boost, helping you fund innovation, acquire new machinery, and expand your R&D projects.
Under the RDEC scheme, large companies can claim an expenditure credit of up to 20% of qualifying R&D spend, which can support further growth initiatives within the business.
Get an estimate of your potential claim using our R&D Tax Credit Calculator.
How did the RDEC scheme change in 2024?
From 1 April 2024, the SME and RDEC schemes were merged for accounting periods starting on that date.
This merger has changed how companies claim R&D Tax Credits and updated the rules around eligibility.
The original RDEC rules still apply to accounting periods starting before 1 April 2024. You can also backdate claims for the two previous accounting periods.
Key changes include:
- A single post-tax benefit rate of around 15% (delivered through a 20% credit rate)
- Updated and standardised rules for subcontracted and subsidised R&D
- Lowered R&D intensity threshold for loss-making SMEs from 40% to 30%
- New restrictions on overseas R&D expenditure
These changes to R&D Tax Credits make it easier for some SMEs to access higher levels of R&D tax relief while maintaining clear rules for large companies claiming under RDEC.
Does my company qualify for the RDEC scheme?
Large companies, defined as those with over 500 employees, a turnover exceeding €100m, or a balance sheet total over €86m, are eligible for the RDEC scheme.
Other examples are:
Recipients of notified state aid
Recipients of notified state aid
If an SME has received government grant funding, e.g. through the Innovate UK agency, it will need to claim R&D tax credits through the RDEC scheme rather than the SME scheme.
Subcontracted R&D
Subcontracted R&D
If an SME has been subcontracted to conduct research and development work, it will need to claim tax relief through the RDEC scheme.
Partner & Linked Enterprises
Partner & Linked Enterprises
If your business has close connections to other companies, it could be categorised as a linked or partner enterprise and may therefore be eligible to make an RDEC claim. Find out what qualifies for R&D tax credits here.
Find out the value of your claim
Any business in any sector can qualify. Discover how much you could be owed today!
What can be claimed as R&D Tax Credits under the RDEC scheme?
Under the RDEC scheme, large companies can claim Corporation Tax relief on projects that meet HMRC’s definition of research and development. Learn more about how to account for what credits you can claim back on in our RDEC accounting guide.
Projects may be eligible for the RDEC scheme if they meet the following criteria:
- The project aimed to achieve an advance in the field
- Scientific or technological uncertainty was present
- Your business actively worked to resolve that uncertainty
- Your company demonstrated that a professional in the field couldn’t identify a solution
How do I claim on the RDEC scheme?
The first step is to contact our specialist advisers, who are ready to work on your RDEC claim and carry out the detailed research needed to maximise your tax relief.
With nearly 20 years of experience, we can identify all qualifying R&D activities for inclusion in your claim, using proven processes designed for success.
Working closely with your business, we will produce a detailed technical report – the key document explaining the qualifying R&D activities, the scientific or technical challenges addressed, and how your project meets HMRC legislation.
Our senior-level team’s expertise ensures a high success rate for claims. You can also get a clear indication of your potential claim value using our R&D calculator.
R&D RDEC Scheme FAQs
What are the benefits of claiming the RDEC scheme?
The RDEC scheme gives companies additional funding for eligible R&D activities, helping them stay competitive in the market through cash injections. It also supports investment in innovative projects, potentially boosting long-term success.
Other advantages of claiming through the RDEC scheme include receiving large sums for each eligible project, reducing your Corporation Tax liability, improving cashflow, and supporting continued innovation.
Which sectors are eligible to claim tax credits via the RDEC scheme?
At randd, we categorise companies into 16 distinct sectors, with Manufacturing & Engineering, Software & IT and Security & Electrical among the most active in claiming under the RDEC scheme. You can explore all 16 sectors we support here.
Can SMEs claim tax credits under the RDEC scheme?
Yes. SMEs that carry out qualifying R&D work for large companies can submit a claim under the RDEC scheme. Speak to a specialist to see what you might be able to claim.
Accordion Item Heading
This is a default paragraph for the accordion item.
What evidence does my business need to make a successful RDEC claim?
HMRC may request further information to support an RDEC claim, such as records of qualifying activities, project documentation and associated R&D costs. If you’re unsure what information you need, get in touch with us to find out more.
How much can my business claim under the RDEC scheme?
Under the RDEC scheme, companies can claim a 20% gross (15% net) RDEC tax credit on qualifying R&D expenditure, with no upper limit on the amount you can recover.
How will my business receive RDEC tax credit following a successful claim?
An RDEC tax credit can be received as a cash payment, a reduction in your Corporation Tax liability, or as a rebate on tax you have already paid, depending on your company’s position.
What’s the deadline for claiming RDEC tax credit?
You can submit an RDEC claim each year and retrospectively for the previous two years. For example, if the end date of your accounting period each year is 31st March, you would need to submit your R&D tax credit claim for the accounting period 1st April 2023 to 31st March 2024 before midnight on 31st March 2026.
Ready to discuss your unclaimed R&D Tax Credits?
Complete the form to request a call from one of our consultants or click here to send us a message.