Claiming R&D Tax credits for your software company
If your company is dedicated to software development, you may be entitled to tax credits to support the research and development expenditure involved in innovative creation. It’s often thought by businesses that R&D tax relief can only be sought by organisations in industries such as manufacturing or pharmaceuticals, and that things like software aren’t eligible.
However, HMRC’s guidelines for claiming state, broadly, that eligibility is based on whether the R&D work ‘seeks to achieve an advance in overall knowledge or capability in a field of science or technology through the resolution of scientific or technological uncertainty – and not simply an advance in its own state of knowledge or capability.’
Leading the Way to Innovation
The growth of the software development industry, both through updating existing technology and producing completely new innovations, means that the tax credits available can result in a significant reduction in Corporation Tax, thus freeing up more budget for continued R&D.
The UK government is seeking to encourage the progress being made by British businesses and wants the UK to remain a leader in R&D. As such, it’s understood that R&D takes time, resources and budget to produce effective results.
In fact, HMRC makes it clear that even if previous software R&D you have undertaken has been deemed unsuccessful, you may still qualify for tax credits. The very nature of R&D means that there will always be the chance that something that works ‘in theory’ is not viable when physically implemented.
To support businesses, HMRC has produced a manual on R&D tax relief, as well as other guidance for SMEs on how to claim. As with many tax-related claims, however, the process of obtaining relief for R&D projects can still be daunting, complex and time consuming.
Get Professional Help
Any business owner knows to focus their resources on the areas in which they excel and to delegate areas in which they are weak or need support to others. Enlisting the services of specialist advisors in tax credit software can therefore help eliminate any worries or reluctance to delve further.
Going to a tax credit software specialist who will understand your R&D project, including both the technical and financial aspects of your application and whether your research qualifies, is one great way to take the stress out of trying to apply independently. A specialist will also advise you in what approach you may need to take when developing new software so that your R&D falls within the parameters of the scheme and gives you optimum chance of being eligible.
Avoiding time consuming applications and enlisting the services of such an expert especially if you are not familiar with the application process will always save you time and money in the long run and ensure you are awarded the maximum tax relief entitlement. This will, in turn, give your R&D projects the best chance of long term success without the worry of limited time, resources or budget.