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R&D Tax Credit for Software Developers – Are You Eligible?

22 Aug 14

There are plenty of misunderstandings about research and development tax credits for software developers – the good news is that many software developers can and should be claiming Research and Development Tax Credits.

Complex website designers, games software developers and web application developers should certainly look at claiming research development tax credit for software development activities and projects.

If your company is involved in developing software services and tools such as e-commerce platforms, intranet integration systems, database and information management and reporting tools or other similar applications and software tools, you are probably doing R&D.

So you should certainly be looking at claiming. You might be pleasantly surprised at the size of the benefit you can get.

Checking out eligibility for research and development tax credit for software developers is fairly straight forward – just ask yourself four quick questions:

  1. Do we spend time designing web based applications as well as websites?
  2. Do we consider that our web based applications are creative and innovative?
  3. Do our software developers have to test possible solutions and experiment before we have a stable and working web based application?
  4. Are we constantly trying to offer more competitive and innovative solutions for our clients?

If you answered yes to these questions, then you should certainly seek advice from a specialist on whether you should claim (usually asking a specialist is preferable to asking your accountant, unless your accountant has an R&D specialist on their team).

In straight forward terms, a bog standard website creator probably cannot claim; but as soon as you add web based applications such as social media tools, e-commerce, custom intranet capabilities…….then you are probably applying science or technology to create technical advances through the enhancement of creations of new software products, processes, systems or services.

The current HMRC tax rules on research development tax credit permits you to look back over the past two years, in addition to getting tax relief or credits for the current year. The years you can look at are based on your company accounting year end. You only need to have a couple of paid staff working on specialist projects to build up a significant claim! Note that all eligible costs have to be items you put through your profit and loss expense account e.g. the cost of staff on payroll, or externally provided contractor costs are eligible, but dividends paid to directors are not eligible costs. Just make sure you get some advice and file your claim before your next company accounting year-end date, or you will lose the benefits relating to a full year’s claim and that can hurt……

Getting an initial assessment of whether you can claim and how much your claim could be worth should cost you absolutely nothing – just telephone a specialist such as myself or one of my colleagues in and have a chat about it.

Research and development tax credit for software developers is a great source of support and is there to assist you in building and growing your company so make the most of it while you can!

Are you ready to find out if you qualify or how much your R&D claims could be worth?


Contact Us Today

For more information or to contact us - call us on 0771 9439 229 - or send us a message


For more information on claiming R&D tax credits or our business advice and support services call us on 0771 9439 229

Or send us a message

PO Box 53448,
SE18 9DE


Our consultants are members of London Group Business Advisors and Home Counties Business Advisors.

Linda Eziquiel is a Fellow of the Institute for Independent Business and a Principal Consultant at RandDTax (specialists in Research and Development tax credits) – UK co. reg. no. 08160439.

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