R&D Expenditure Credit (RDEC)

The R&D Expenditure Credit (RDEC) is a UK government incentive designed to encourage large companies and certain SMEs to invest in research and development. Unlike the SME scheme, RDEC operates above the line in the accounts, meaning it appears as income in the profit and loss statement and is visible to shareholders and stakeholders. For accounting periods beginning on or after 1 April 2023, the RDEC rate increased from 13% to 20% of qualifying R&D expenditure.

At FI Group, we help large companies and SMEs ineligible for the SME scheme navigate RDEC claims efficiently, ensuring compliance with HMRC guidance while maximising relief. With experienced consultants, including engineers and PhDs, and a presence across the UK and in 20 countries worldwide, we offer both local insight and global strategy.

Request a free audit

Who Can Claim RDEC?

RDEC is primarily aimed at:

  • Large companies (over 500 staff, turnover above €100 million, or balance sheet over €86 million)
  • SMEs that are subcontracted to perform R&D
  • SMEs that have received notified state aid for their R&D projects

RDEC is the only available scheme for these types of businesses and is governed by distinct rules on qualifying activities and costs.

Eligible Activities and Costs

To qualify for RDEC, a project must meet HMRC’s definition of R&D:

  • It must seek to achieve an advance in science or technology
  • It must involve scientific or technological uncertainty
  • The solution must not be readily deducible by a competent professional
What Costs Qualify Under RDEC?
What Costs Qualify Under RDEC?

Qualifying Costs

  • Staff costs (salaries, pensions, NIC)
  • Externally provided workers (EPWs)
  • Subcontracted R&D (limited circumstances)
  • Software and consumables used in R&D
  • Contributions to independent research organisations

FI Group provides detailed technical assessments to identify all eligible activities and ensure that your RDEC claim is complete and compliant.

Speak To Our Costs Expert
What Costs Qualify Under RDEC?

How the RDEC Works

The RDEC is a taxable credit, usually calculated at 20% of eligible R&D expenditure. It is accounted for above the line and then used to reduce the company’s corporation tax liability.

Example:

  • £1,000,000 in qualifying costs
  • 20% RDEC = £200,000
  • After corporation tax (at 25%) is applied to the credit, the net benefit is £150,000

This makes RDEC a highly valuable mechanism for recouping investment in innovation, particularly for businesses operating at scale.

Recent Changes to RDEC

As of April 2023, the RDEC rate increased to 20%, and changes to subcontracting and overseas R&D came into effect from April 2024 under the new Merged R&D Scheme. These changes will ultimately replace both RDEC and the SME scheme for most companies.

Until then, companies that remain under RDEC can continue to claim but must prepare for the transition. FI Group offers guidance on managing this change, ensuring that your claims are forward-looking and aligned with future legislation.

What Makes Us Different
What Makes Us Different

How FI Group Supports RDEC Claims

FI Group brings a unique combination of scientific, technical, and tax expertise to each R&D tax relief project. Here’s how we can support you:

  • Eligibility Analysis: We assess whether your company and projects qualify under current and future rules
  • In-Year Claim Management: Our quarterly claims process supports faster access to relief
  • Documentation and Compliance: We prepare robust technical and financial documentation that meets HMRC’s expectations
  • HMRC Enquiry Support: Our comprehensive approach ensures an extremely low enquiry rate
  • Global Insight: With offices in England, Scotland, and around the world, we support businesses with cross-border R&D strategies
Book A Meeting

RDEC FAQs

Everything You Need to Know About R&D Tax Credits for Large Companies

Have questions about the RDEC scheme? Our FAQs cover everything you need to know about eligibility, claims, and how large companies can benefit from R&D tax credits.

Talk To Us Book A Meeting
Speak to FI Group’s team of engineers, PhDs and tax specialists today. With offices across the UK and a presence in 20 countries, we’ll help you assess your R&D Tax Credits eligibility with confidence.
Speak to an Expert

RelatedServices

Agri-Tech Grants & Smart Farming Tax Relief UK
Biotech Grants and R&D Tax
Engineering Grants and R&D Tax Credits
Fintech Innovation Grants & R&D Tax Credits UK
Innovation Grants for AI & R&D Tax for Artificial Intelligence Innovation
Innovation Grants for Software & R&D Tax
Manufacturing Grants and R&D Tax
Pharmaceuticals R&D Tax and Grants

Certifications

CertificaciónCertificación
FI Group UK
© Fi Group