RDEC Scheme
The RDEC scheme was the UK’s research and development tax relief programme for large companies, as well as SMEs in certain circumstances, for accounting periods beginning before 1 April 2024. We explain how the RDEC scheme worked, who could claim, what qualified as eligible R&D activity, and how it has since been replaced by the merged R&D scheme.
What is the RDEC scheme?
The RDEC (Research and Development Expenditure Credit) scheme was the UK’s R&D tax relief scheme for large companies, and certain SMEs, for accounting periods starting before 1 April 2024.
Depending on your company’s position, the credit could be used to offset Corporation Tax (for your company or another within the same Group) or received as a cash payment.
The RDEC scheme now applies only to claims relating to these earlier periods, subject to the standard two-year claim deadline.
NOTE: This page explains the legacy RDEC scheme, which applies only to accounting periods before 1 April 2024. For most current claims, R&D Tax Relief is now delivered through the merged R&D scheme.
Why review your RDEC eligibility?
If your business carried out qualifying R&D before 1 April 2024, you may still be able to submit a claim under the RDEC scheme.
R&D Tax Credits can provide a valuable financial benefit, helping to support innovation, invest in new technologies, and fund further development work.
Under the RDEC scheme, large companies could claim an expenditure credit of up to 20% of qualifying R&D spend.
Get an estimate of your potential claim using our R&D Tax Credit Calculator.
What replaced the RDEC scheme?
From 1 April 2024, the merged R&D scheme replaced the RDEC scheme for accounting periods starting on or after that date.
This introduced a single R&D Tax Relief framework for most companies, changing how claims are calculated and how relief is delivered.
The original RDEC rules still apply to accounting periods starting before 1 April 2024, and claims can generally be backdated for up to two years.
Key features of the current system include:
- A single above-the-line credit rate of 20%, with a post-tax benefit of around 15% depending on the company’s position
- Updated and standardised rules for subcontracted and subsidised R&D
- A reduced R&D intensity threshold of 30% for loss-making, R&D-intensive SMEs
- Restrictions on overseas R&D expenditure
If your accounting period began on or after 1 April 2024, you will need to claim under the merged R&D scheme rather than 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.
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.
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