19 Nov 2019

R&D Tax Credits for Software Projects

Sam Stephens

Many of the Software Developers, Web Design and Digital Agencies that we speak to, do not realise that the work that they do day-in and day-out makes them eligible to claim R&D Tax Credits!

What is R&D?

We often find that businesses are under the illusion that research and development is only conducted by people in white lab coats or engineers tinkering.

Fortunately, we are here to inform you that under HMRC guidelines – R&D is considered as any activity that seeks to “achieve an advance in overall knowledge or capability in the field of science or technology and resolve scientific or technical uncertainty.”

In plain English, this means – if you are working on something that has made you scratch your head, and that a competent professional in that field (for example, a senior developer) couldn’t easily solve, then it’s likely to be R&D!

TBAT Top Tip: To be considered R&D, projects do not have to be successful in achieving the desired end-result; the unsuccessful attempts are still R&D.

Eligible activities

The HMRC guidelines for R&D Tax Credits can sometimes provide more confusion than clarity on what is classed as eligible activities. To illustrate what everyday activities could make you eligible to claim R&D Tax Credits, we have some examples:

  • Creating algorithms
  • Third Party API (Application Program Interface) integration
  • Bespoke metric analytics
  • Bug fixing – which required further testing and development
  • Creation of difficult code and logic
  • User testing
  • Developing custom apps
  • Development of automated testing software
  • Custom databases/CRM’s
  • System feasibility

Does this ring any bells with what your business has been working on recently? This is just a sample of eligible activities and is by no means an exhaustive list.

Unfortunately, there are a few simple exclusions that we should mention too:

  • UX (User Experience)
  • Aesthetics such as updating of graphics/fonts etc.
  • Anything involved with Word Press

Under the SME Scheme, you can claim for different categories of expenditure – these include PAYE staff costs, agency worker costs, sub-contract costs, software costs and materials costs. This is applicable within all your eligible activities and projects.

We have worked with businesses that conduct a wide variety of software development, web design and computer science, helping them to identify their eligible R&D and make a successful claim for R&D Tax relief.

This is what a few of them have said:

“The funds claimed with TBAT’s help, ensured we can invest in our software to remain competitive in our sector.” – Peter Evans – Commercial Director – EWS Digital

“The team at TBAT just get it! They very quickly understood our offer and worked seamlessly across all levels of the business, from Junior Developers to the Financial Director to make the process of successfully claiming our R&D Tax Credits, painless and ultimately rewarding.” Jim Willis – Managing Director – Bulb Studios

“We have confidence that our partnership with TBAT will allow Hallam to continue to grow and develop.” – Mike Hallam – Commercial Director – Hallam Internet

Our team of expert Consultants are on-hand to fully understand your business and projects in order to produce a maximised R&D Tax Credit claim on your behalf.

We pride ourselves in being able to ‘bridge the technical expertise gap’ between you and your accountant, resulting in robust and successful reports being submitted to HMRC.

To discuss your R&D projects and how much your R&D Tax Credit claim could be worth to your business, get in touch with one of our team and they will be happy to conduct a free consultation with you!

You’ve read how to turn your ‘0’s and ‘1’s into ‘££’s – now let’s put it into practice!

By entering a few simple figures into the TBAT R&D Tax Credit calculator, it will work out the relief you should be claiming from HMRC.

This can be done for the current financial year and the 2 previous years.

It really is that simple!

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