What you need to know about the RDEC Scheme

Companies of all sizes have been benefitting from research and development tax credits since the scheme was introduced in April 2000. The initiative was introduced to ensure Britain remains at the forefront of scientific and technological innovation and offers remuneration for R&D expenditure for eligible projects.

Two schemes are available: the SME scheme and the R&D Expenditure Credit (RDEC) scheme. The former is reserved for businesses of under 500 employees, who have an annual turnover of less than €100m or a balance sheet total under €86m. Any businesses exceeding these figures fall under the latter scheme, as do those in receipt of non-Notified State Aid grants.

Claiming under the RDEC scheme

Claiming under the RDEC scheme has similar qualifying criteria to claiming under the SME scheme. Namely, that the project for which tax relief is being sought should be seeking to resolve a scientific or technological uncertainty that cannot be easily worked out by another professional in that field. The guidance given by HMRC is deliberately vague, thereby enabling a range of activities in a multitude of sectors to qualify for the tax credits.

What can be claimed?

The tax credit equates to 12% of your businesses’ qualifying expenditure – costs such as workers’ salaries, Class 1 NICs payments, consumables and utilities are examples of this. Any costs incurred from the date the work started to the date the project was completed or abandoned can be claimed for. This credit … Read More