RDEC Tax Credit scheme
Applies to accounting periods which began before April 1 2024. You can retroactively claim under the RDEC scheme for the two years prior to your current accounting period.
What is the RDEC R&D tax relief scheme?
The RDEC scheme is a system in which tax credits can be claimed by either a large company or a small/medium-sized enterprise that does not qualify for the SME scheme.
Whether your business makes a profit or loss, some or all of the R&D expenditure credit may be used to settle your company’s Corporation Tax liabilities or those of another company within the same Group, or can be received as a cash credit.
Why claim RDEC Tax Credits?
R&D tax credits are an important benefit in providing funds to companies which successfully claim for their research and development activities.
Larger companies which claim through the RDEC scheme can receive an expenditure credit of 20% – tax relief which can be invested back into the business, potentially to fund further R&D innovation or new machinery and equipment.
You can gain an indication of how much your claim would be worth by using our R&D Tax Credit Calculator.
How did the RDEC scheme change in 2024?
From April 1 2024, the SME and RDEC schemes were merged for accounting periods beginning on that date.
This has had a significant impact on companies claiming R&D Tax Credits.
Key changes include:
- One single rate and set of rules: 20% post-tax rate between 14.7%-16.2%
- Qualifying rules for subcontracted and subsidised R&D (previously RDEC exclusive)
- Threshold for R&D intensity (loss-making SMEs with qualifying R&D from total expenditure) lowered from 40% to 30%
- Restrictions on overseas R&D expenditure
Does my company qualify for the RDEC R&D tax relief scheme?
Large companies, defined as those with more than 500 staff and a turnover of more than 100 million euros or a balance sheet total over 86 million euros, 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 the government’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 which satisfy the following criteria could be eligible for RDEC tax credit:
- Advancements in the field were achieved
- Scientific or technological uncertainty was present
- Your business tried to overcome uncertainty
- Your company demonstrated that a professional in the field could not identify a solution
How do I claim RDEC Tax Credits?
The first step we advise is to contact our specialist team, who are ready to work on your claim, happy to carry out the significant amount of research needed to optimise the tax relief you receive.
Our knowledge and expertise, built up over nearly 20 years in this industry, enables us to identify and include every R&D activity that can be included in a claim. The streamlined procedures we undertake are proven to be successful.
With input from your business, we will produce a detailed technical report – the vital document explaining the qualifying activities your company has carried out, the scientific or technical challenges the R&D addressed and how existing legislation was adhered to.
We have an unparalleled claim success rate due to the vast experience and knowhow our senior-level team bring to the process. An estimation of how much your claim could be worth can be obtained by using our R&D calculator.
R&D RDEC Scheme FAQs
What are the benefits of claiming RDEC tax credit?
The RDEC scheme allows companies to receive additional funding for R&D activities and can help organisations become more competitive in the market through cash injections. It also allows for investment in innovative projects that could ultimately boost long-term success.
Further advantages of claiming through the RDEC scheme include large sums of money being received for each eligible project, while submitting a successful claim can reduce a company’s tax liability, improve cashflow and boost innovation.
Which sectors are eligible to claim tax credits via the RDEC scheme?
At randd, we categorise companies into 15 distinct sectors, with Manufacturing & Engineering, Software & IT and Security & Electrical among the most prolific for RDEC scheme claims.
Can SMEs claim tax credits under the RDEC scheme?
SMEs undertaking qualifying R&D for large companies may claim under the RDEC scheme.
What steps does my organisation need to follow to make an RDEC claim?
- Identify accounting periods
- Discharge any liability to Corporation Tax
- Identify eligible projects
- Calculate R&D tax benefits
- Complete the CT600 form
If you are unsure about any of these steps, contact us
What evidence does my business need to make a successful RDEC claim?
HMRC may request further information to support an RDEC claim. Get in touch with us to find out more.
How much can my business claim under the RDEC scheme?
The RDEC scheme returns 20% gross and 15% net of your qualifying R&D expenditure, with no upper limit to the amount.
How long does an RDEC claim typically take?
The entire process can take up to 100 days, but most cases are completed sooner.
How will my business receive RDEC tax credit following a successful claim?
R&D Tax Credits are paid as a cash credit, a reduction in your Corporation Tax liability or as a rebate on tax you have already paid.
What’s the deadline for claiming RDEC tax credit?
You can make a claim each year. As well as the latest financial year, you can also claim retrospectively for the previous two years. For example, if the end date of your accounting period each year is March 31, you would need to submit your R&D tax credit claim for the accounting period April 1 2023 to March 31 2024 before midnight on March 31 2026.
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