RDEC stands for Research and Development Expenditure Credit. It is a tax relief scheme offered by the UK government to incentivize and reward companies that invest in research and development (R&D) activities.
Under the RDEC scheme, companies can claim a tax credit for qualifying R&D expenditure. This credit is calculated as a percentage of the company's eligible R&D costs and is used to reduce their tax liability. Essentially, it serves as a way to offset a portion of the costs incurred during the R&D process.
To be eligible for RDEC, companies must be liable for UK corporation tax, engaged in qualifying R&D activities, and not receive state aid for the same R&D project. The scheme is open to companies of all sizes and across various sectors.
The percentage of RDEC a company can claim depends on the size of the business and whether it undertook subcontracted R&D, but typically ranges between 10% and 13%. The credit is then applied to the company's tax bill.
The objective of RDEC is to encourage businesses to invest in innovation and technology development. By providing a financial incentive, the government hopes to stimulate growth, improve productivity, and foster a culture of innovation in the UK.
Overall, RDEC is a tax relief scheme designed to reward companies conducting R&D activities, ultimately contributing to the advancement of technology, science, and innovation.
