UKRI FEC grant guidance sets out how UK Research and Innovation calculates and pays Full Economic Costing on research grants: UKRI funds a fixed 80% of a project’s full economic cost, the research organisation covers the remaining 20%, and costs are split into Directly Incurred, Directly Allocated and Indirect categories under the Transparent Approach to Costing (TRAC) methodology.
Full Economic Costing (FEC) is the UKRI funding model under which a research organisation states the total cost of delivering a project — including staff time, estates and administrative overheads — and UKRI reimburses a fixed proportion of that total rather than reimbursing itemised expenses alone.
- What is UKRI Full Economic Costing?
- How are FEC costs categorised?
- What changed in UKRI’s 2025–2026 FEC guidance?
- How do research administrators apply FEC to a grant budget?
- FEC grant guidance: frequently asked questions
- What this means for institutions
What is UKRI Full Economic Costing?
UKRI’s guidance on FEC grant terms and conditions states the underlying principle directly: research organisations indicate the full economic cost of a project in their proposal, and UKRI pays “a fixed percentage of 80% of this sum unless stated otherwise.” The remaining 20% must come from the research organisation’s own resources.
Where a project also has external co-funding, for example from an industry partner, that contribution is treated as additional to FEC — UKRI still funds 80% of the remaining resources needed, rather than reducing its own contribution pound-for-pound.
Several categories of cost fall outside the 80% rule entirely. Associated studentships are funded at 100% of UKRI’s standard annual stipend and fee values, and externally contracted social surveys are funded at 100% under the “Exceptions” heading. Postgraduate students are also excluded from the full-time-equivalent (FTE) count used to calculate estates and indirect charges.
How are FEC costs categorised?
UKRI’s FEC guidance divides every grant budget into three cost categories, and getting this classification right is the first task for any research administrator building a proposal. Each category is audited, funded and adjusted differently if a grant changes scope or ends early.
| Cost category | Definition | How it is evidenced |
|---|---|---|
| Directly Incurred (DI) | Costs explicitly identifiable to the project — research assistant salaries, consumables, travel, equipment under £25,000 | Auditable cash spend, supported by timesheets and invoices |
| Directly Allocated (DA) | Shared resources used by multiple projects, including investigator time, pool technicians and major facilities | Estimates applied at proposal stage; not vired or re-audited during the grant |
| Indirect Costs | Non-specific overheads — central administration, general laboratory and office consumables, some departmental services | A standard rate per research FTE, derived from the institution’s TRAC return |
Estates and indirect rates are not calculated per grant. Instead, a university’s whole-institution TRAC return sets a standard charge-out rate per research FTE, which is then applied to every proposal. Institutions with under £3 million in annual public research income may instead use TRAC dispensation default rates, reviewed annually by UKRI and the UK higher education funding bodies.
Project leads and co-leads can be funded up to 100% of salary, calculated on a notional maximum of 1,650 hours a year (37.5 hours a week across 44 weeks) — but this investigator time is itself only reimbursed within the overall 80% FEC envelope once combined with the rest of the project’s costs.
What changed in UKRI’s 2025–2026 FEC guidance?
UKRI’s FEC grant terms and conditions are not static, and the guidance has been revised twice in the current funding cycle — a detail research administrators updating budget templates should not overlook.
- Equipment funding at 80% FEC. From 1 April 2025, UKRI moved to fund all new equipment purchases at 80% of FEC rather than the fuller funding some equipment previously attracted, with limited exceptions for dedicated infrastructure opportunities, instrument development awards, and international partner costs in OECD Development Assistance Committee-listed countries.
- Capital equipment threshold raised. The threshold above which an item counts as capital equipment rose from £10,000 to £25,000 on the same date, reducing the number of smaller purchases that require separate capital justification.
- No default expectation of matched funding. UKRI clarified that, unless a specific funding opportunity states otherwise, there is no default expectation that institutions provide matched funding on top of the standard 20% FEC contribution.
- Tighter no-cost extension limits from 1 April 2026. Non-people-related no-cost extensions are now capped at six months over a grant’s lifetime, except in defined exceptional circumstances (such as ethics delays or export-control licensing under Trusted Research and Innovation); extensions approved before 1 April 2026 do not count towards that limit.
UKRI has framed these changes as a response to its own Research financial sustainability: insights paper, which found research costs have outpaced available funding — the same “sustainability gap” that independent analysis by the Innovation and Research Caucus has linked to persistently low FEC cost recovery.
How do research administrators apply FEC to a grant budget?
Building a compliant UKRI budget starts with classifying every cost line as Directly Incurred, Directly Allocated or Indirect before a single figure is entered, since each category is treated differently at award and close-out.
- Confirm the institution’s current TRAC-derived estates and indirect rates per research FTE before costing investigator and technician time.
- Cost equipment over £25,000 as capital equipment, and expect it to be funded at 80% FEC rather than assumed to be fully reimbursed.
- Identify any Exceptions items — associated studentships and externally contracted social surveys — and cost these at 100% rather than 80%.
- Keep the full FEC figure, not just the 80% UKRI contribution, visible in internal costing tools, since the 20% institutional contribution must be tracked and reported against.
- Reduce Estates, Indirect and Infrastructure Technician claims proportionately if a funded post goes unfilled or a staff member leaves more than six months before the funded period ends.
At grant start, only Directly Incurred, Directly Allocated or equipment costs can be drawn down — estates and indirect costs cannot be claimed until the Grant Start Confirmation is issued. At close-out, Directly Incurred costs settle against actual expenditure, while Directly Allocated and Indirect Costs are paid as requested, provided the grant runs its full course and stays within the cash limit.
FEC grant guidance: frequently asked questions
What percentage of research costs does UKRI FEC actually cover?
UKRI funds a fixed 80% of a project’s Full Economic Cost, with the research organisation providing the remaining 20% from its own resources. Some cost types are treated as Exceptions and funded at 100%, including associated studentships and externally contracted social surveys, so administrators should check each cost line against the exceptions list before assuming the 80% rate applies universally.
What is the difference between Directly Incurred and Directly Allocated costs?
Directly Incurred costs are auditable cash amounts spent specifically on a project, evidenced by invoices and timesheets. Directly Allocated costs are shared resources — investigator time, pool technicians, major facilities — charged on estimates rather than actual audited spend, and these estimate-based figures cannot be re-audited or vired once the grant is underway.
What is TRAC and why does UKRI’s FEC guidance depend on it?
The Transparent Approach to Costing (TRAC) is the agreed sector methodology UK universities use to calculate the full economic cost of research activity from their financial statements. UKRI’s FEC guidance relies on each institution’s annual TRAC return to set the standard estates and indirect charge-out rate per research FTE applied across every grant proposal.
Has UKRI changed how it funds research equipment?
Yes. From 1 April 2025, UKRI moved to fund new equipment purchases at 80% FEC rather than fuller reimbursement, and raised the capital equipment threshold from £10,000 to £25,000. Institutions costing equipment-heavy proposals need to budget the 20% shortfall rather than assume equipment sits outside the standard cost-share rule.
What this means for institutions
The direction of UKRI’s FEC guidance since 2025 is toward tighter, more explicit cost-recovery rules rather than looser ones: equipment now sits inside the 80% rule, extensions are time-limited by default, and matched funding is explicitly not assumed. For institutions already struggling with the FEC recovery gap documented in UKRI’s own sustainability insights work, each of these changes shifts marginally more cost risk onto the research organisation’s 20% contribution.
Research administrators building budgets should treat the FEC grant guidance document as a living compliance reference rather than a one-off read: rates, thresholds and exception lists are reviewed and republished, and the terms and conditions in force at the time of a purchase or activity — not at the time the grant was awarded — are the ones that apply for audit purposes.
