RDEC Scheme

Who Can Claim RDEC? 

Any UK company subject to corporation tax and undertaking qualifying R&D activities can make an RDEC claim. The scheme is open to both profit-making and loss-making businesses, with specific rules for subcontracted R&D and group structures. 

✅ Eligibility criteria include:  

• large company  

• small and medium-sized enterprise and you’re claiming for work that has been subcontracted to you  

• small and medium-sized enterprise and you’ve received a notified State Aid for the project  

• small and medium-sized enterprise and you’re claiming for costs that have been subsidised in some other way, such as a grant 

If your company does not meet these conditions you may be able to claim using the small and medium-sized enterprise tax relief scheme. 

✅ To claim your company must : 

• be trading  
  
  
• be chargeable to Corporation Tax  
  
  
• have a project that meets the definition of R&D  
  
  
• have costs that qualify for the relief 

Qualifying R&D Costs 

✅ Eligible costs for the RDEC tax credit include: 

• Staff directly involved in R&D
  
  
• Consumables and materials
  
  
• Software and data licences 

• Subcontracted R&D (subject to new rules)* 

• Utilities and some overheads 

✅ *For accounting periods beginning before 1 April 2024, companies can only claim the allowable costs, listed on this page, for work contracted to you by: 

• large companies 

• a person not liable to UK Corporation Tax 

Costs for any other type of person or company contracted the work to the company cannot be claimed. 

For accounting periods beginning on or after 1 April 2024, only the company who makes the decision that R&D needs to be carried out can claim the tax relief. This applies to all companies. 

✅ You can claim for the allowable costs, listed on this page, for work done to fulfil a contract, if you can provide evidence that shows your company: 

• made the decision to carry out the R&D
  
  
• planned the R&D 

The company you’re doing the work on behalf of must not have initiated the R&D or known this needed to be done to fulfil the contract. 

✅ Additionally, under the new rules, to qualify for relief, expenditure on payments to contractors is required either to be incurred on R&D undertaken: 

• in the UK (CTA09/1134(3)(e), CTA09/1136(3)), or 
  
  
• outside the UK in the circumstances described in CTA09/1138A(2).
  
   

RDEC Calculation Example 

If your company spends £1,000,000 on qualifying R&D, you can claim a 20% R&D Expenditure Credit (£200,000). After corporation tax, the benefit is typically £150,000. 

Key Features of the RDEC Scheme 

• Above-the-line credit: Improves visibility of R&D investment in your accounts
  
  
• Simplified rules: The merged regime streamlines the R&D claim process for all companies
  
  
• Contracted-out R&D: Updated rules clarify who can claim for subcontracted activities
  
  
• Compliance focus: HMRC is increasing scrutiny to reduce error and fraud
  
  
• Continued support: The government is committed to maintaining generous rates for innovation 

Why Choose Tax Advisory Partnership? 

Our experts guide you through every step of your RDEC claim: 

• Assessing eligibility and qualifying costs
  
  
• Preparing robust documentation
  
  
• Navigating new RDEC calculation rules
  
  
• Maximising your R&D tax credits UK

To explore our full range of Research & Development tax services , visit the Innovation Tax Reliefs page.

📞 Contact Tax Advisory Partnership using the form at the bottom of the page for specialist advice on the RDEC scheme and all aspects of research and development tax credit UK.