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ServicesR&D tax credits

RDEC scheme

What is the RDEC scheme?

The Research and Development Expenditure Credit (RDEC) is given as a taxable credit on the amount of qualifying R&D expenditure payable as cash or as an offset against the company’s Corporation Tax liabilities. Therefore, it applies whether your company is making a profit or a loss.

Companies who claim under the RDEC scheme historically received over 10% of their R&D spending refunded, for expenditure incurred on or after 1 April 2023, this will increase to just over 16%.

For accounting periods starting on or after 1 April 2024, the RDEC scheme will continue as a merged, single scheme for large businesses and SMEs. At that point, the notional tax rate applied to loss-making companies will be 19%.


RDEC claims reported by HMRC for 2021-22*


The average claim for the RDEC scheme projected for 2021-22*

How can you benefit from the RDEC rate?

You are classed as a large company for the purposes of R&D tax incentives if you employ more than 500 staff or you have a turnover of more than €100 million and more than €86 million in gross assets. The R&D tax credit rate for RDEC means that large companies historically got over 10% of their R&D spending refunded. For expenditure incurred from 1 April 2023 this will increase to 15%.

RDEC allows the benefit of R&D to be accounted for within the Profit and Loss (P&L) account, above profit before tax, rather than only through the tax account. 

The RDEC also enhances the company’s earnings before interest and taxes (EBIT) and, therefore ends up being more lucrative for larger companies. The scheme is now a straightforward subsidy against the level of R&D spend that your company incurs.

Why choose Source Advisors


Our one and only goal is to get you the maximum benefit you deserve for innovating in the UK. When you meet your Technical Consultant, it will feel like you’re talking to a colleague rather than an advisor.


We don’t start with your balance sheet. We start by walking the floors and understanding the things you do and the things you make.


There is no conflict of interest. As this is all we do our advice will never conflict with other tax or audit advice you receive.


You are paying for our expertise (not to support a large corporate infrastructure). Experience tells us that when other firms prepare a claim that they leave some of the value off the table. Even the biggest names.


Source Advisors optimises claims through an expert led, detailed assessment of your activities. 


We are not the Big 4, and we are proud of it. We are the challenger and the better pair of hands. Innovation is about pushing the boundaries and embracing uncertainty to gain advancement.

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to find out how you can make the most of your innovation

How Source Advisors can help you claim under the RDEC scheme

Irrespective of what industry or sector you are, Source Advisors can help you identify eligible R&D activities for tax purposes. Source Advisors are always on top of the latest changes in legislation. You can rely on our expertise, leaving you to focus on your main business.

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With a tax credit rate of 20% from 1 April 2023, large companies, and some SMEs, could get 15% of their R&D spending refunded through the Research & Development Expenditure Credit (RDEC). You are classed as an RDEC qualifying company if you, and all connected companies, employ more than 500 staff. Even if you and all connected companies employ fewer staff, but you have a turnover of more than €100 million and more than €86 million in gross assets, you qualify for the RDEC scheme.

In addition, if you are an SME you might need to access the RDEC scheme if:

  • Your R&D is subsidised
  • You have applied for, or are receiving, State Aid for your R&D projects
  • You are subcontracted by a larger company
  • You are no longer a “Going Concern”
Irrespective of what industry or sector you are, we can help you identify eligible activities for R&D for tax purposes. R&D takes place when a project seeks to achieve an advance in overall knowledge or capability in a field of science or technology. You can claim the RDEC tax credit rate of 20% against certain costs that are allowable for tax purposes on the project including:
  • Employment costs to the company including salaries, bonuses, some reimbursed costs, employers Class 1 National Insurance contributions, employers pension fund contributions
  • Subcontractor costs, although there are certain restrictions when you are claiming under the RDEC scheme, ask us to find out more
  • Externally Provided Workers (EPWs)
  • Software (revenue costs)
  • Consumable items including materials and utilities like light and heat
  • Clinical trials volunteers in the pharmaceutical industry
For full accounting periods starting on or after 1 April 2023 the following R&D related costs will also be allowable.
  • Data licenses
  • Cloud computing

We will do the heavy lifting to put your claim together. The technical and financial reports explain how your R&D project:

  • Meets HMRC’s definition of qualifying R&D activities and expenditure
  • Sought for an advance in science or technology and aimed to achieve this advance
  • Had to overcome scientific or technological uncertainty
  • Could not easily be worked out by a professional in the field

Ensure your business recognises and receives the full credit it is due with Source Advisors IP services

The Patent Box is closely linked with R&D tax relief and a company can often claim tax relief under both schemes. Source Advisors can offer you advice to optimise your claims across both schemes. Find out more about our IP services including Patent Box.

Contact us
to find out how you can make the most of your innovation

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