Specialist R&D Tax & Grant Funding Advisors

Software

The average software development R&D tax claim is over £74,000. With a 100% success rate in filing software development R&D claims, Myriad Associates knows exactly what to do to help you claim the maximum R&D tax entitlement for your software development project.

Find out if you're eligible

Software

Guide Overview


Below we've created 5 simple sections to help you understand how R&D tax credits work in software development and whether your business could make a claim.

R&D Tax Credits for software development explained


Whether you’re a software development company or a business that develops software in-house, if you’re making an advance in computer science or information technology, you could be eligible for R&D tax relief.

You might be trying to resolve a scientific or technological challenge or uncertainty. You might be developing new products, processes, architecture techniques or services, or you might just be looking to improve existing ones.

Regardless, if the goal of your software project is to advance the knowledge or capability of the computer science, and information and communication sectors (not just your own company), then you should consider claiming for software development R&D tax relief.

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Is your software project eligible for an R&D claim?


Your software development project doesn’t have to be pioneering or even successful to qualify for R&D tax relief. But it does need to meet two criteria:

1. Does your project seek to create an advance in science or technology?

To meet this criterion, you must prove you’re doing at least one of the following:

  • Looking to achieve something that hasn’t been done before
  • Trying to overcome constraints that haven’t been faced before
  • Using methods that haven’t been tried before

2. Is your project overcoming a scientific or technological uncertainty?

When submitting an R&D claim for your software project, you need to prove to HMRC that the objective of your project is to overcome uncertainty at a technology level, and you need to show evidence that the uncertainty was not immediately resolvable.

4 reasons to claim R&D tax credits for software development

If your software development project is eligible for R&D tax relief, you could claim up to 33.35% of your R&D spend. Here are some other benefits.

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Sustainable growth

Securing R&D tax credits could allow you to hire more skilled people, take on bigger risks, try new things, become more agile and grow your company.

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Innovative culture

Create a culture of innovation inspiring new ideas and driving people to push boundaries. The benefits of cultivating this type of innovative culture will accumulate, year on year.

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Competitive edge

Remain competitive by investing in innovative projects and serving your customers better than your competitors do.

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Quicker time-to-market

Give yourself the funding to get your new, improved and ground-breaking software developments out to market quicker.

“Myriad Associates have provided us with an excellent service over the past 5 years, working with us to prepare our submission for R&D tax relief. They have a high level of understanding of our industry and technologies, as well as the relevant tax rules.”

Peter Hinchliffe

Strategy Director at NXT Digital Solutions

Does your business qualify?

Speak to our experts today to see if your software activities qualify.

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How can we help with your software R&D claim?


Myriad Associates has helped companies in the software industry claim R&D tax credits for over a decade.  We know exactly how to get the maximum amount of R&D tax relief for your software project. Our R&D tax relief team have a 100% success record and have, in the past, successfully helped clients 3x their R&D claim value compared to their previous ln-house prepared claims.

About Myriad Associates
R&D Tax Credits
  • Because we’re so confident in our R&D tax claim expertise and knowledge, we offer our R&D tax credit service on a success fee-only basis.
  • We’ll handle your software R&D tax claim from start to finish, taking up just two to three hours of your time.
  • Our expert R&D tax specialists will identify all qualifying software projects, activities and expenses.
  • Due to our close working relationship with HMRC and our right-first-time approach, your R&D tax credit claim will be handled promptly.
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Our results

  • We have a 100% success rate spanning 19 years, which means HMRC has processed all of our claims on time and in full.
  • Trusted and respected advisor to our many delighted clients with an industry high customer retention rate.
  • We have achieved exceptional results by resubmitting R&D claims that were originally filed by the client. In some cases, we’ve increased previous claims by 300%.
  • We have a first class reputation delivering maximised R&D tax credit claims to companies in manufacturing & engineering, pharmaceutical, software, supply chain, digital design, immersive technology, food and beverage and many more.

Frequently asked questions


The list of software projects that usually qualify for R&D tax relief is broad. Some common examples of the types of software development projects that usually qualify for R&D tax relief include: 

  • Software for new projects, or new functionality for existing R&D projects 
  • Tools to extend the functionality of application software programs or of an operating system 
  • Making extensions to database software, programming languages, or operating systems Software development tools, such as tools to port data across platforms, tools for image processing or character recognition 
  • Novel data management techniques, such as new object representations and new data structures 
  • Innovative methods of capturing, transmitting, manipulating, and protecting data 
  • Software to run new computer hardware 
  • Software to run on devices with pre-installed operating systems, such as handheld GPS, mobile phones, and tablets  
  • Means of integrating hardware and software platforms 

The following tasks are usually considered eligible for software R&D tax credits:  

  • Defining technical objectives 
  • Identifying uncertainties 
  • Feasibility studies 
  • Reviewing new and competing technologies  
  • Analysing, designing and developing the technology  
  • Producing technical specification or other documents to explain and support the R&D project and advancement  
  • Testing the product, process or software  
  • Planning and managing projects 
  • Indirect activities that are specifically required to support R&D activities may also qualify for R&D tax relief (e.g. administration, finance, personnel and training). 

When submitting an R&D tax relief claim for your software project, you can normally claim for the following expenses:     

  • Staff costs (Staff costs include gross pay, employer's NI and employer's pension contributions)  
  • Agency workers, subcontractors or freelancers 
  • Software licenses  
  • Disposable items such as heat and light, and materials and equipment used in, or transformed by, the R&D process 

There are two R&D Schemes you can apply for R&D tax credits under.   

1. SME scheme 

This scheme is used by companies that have:  

  • Less than 500 members of staff 
  • Have a turnover of under €100m 
  • Have a balance sheet that’s under €86m 

The SME scheme allows profitable organisations, that meet the above criteria, to deduct an extra 130% of their eligible R&D expenditure from their taxable profit. For businesses that have made a loss, a claim can be made that’s worth up to 14.5% of the surrenderable loss.  

2. The RDEC Scheme 

The RDEC scheme is usually used by larger companies (or by SMEs who have either received some kind of grant for the R&D work or where it has been subcontracted to them by a non-SME) that have:   

  • A staff headcount of over 500 
  • A turnover of €100m or more 
  • At least €86m in gross assets 

With the RDEC scheme, companies can expect a claim value of up to 9.72% of their eligible expenditure. 

Having a clear understanding of the R&D legislation surrounding software development is key to making a successful R&D claim.  

To qualify for R&D tax credits, your company must pay UK corporation tax and it should be funding the software development project you’re putting a claim in for.  

Work out which activities should be included in your R&D tax claim and attribute the correct amount of time and expense to each one. Then, choose which scheme you want to apply under: the SME scheme or the RDEC scheme (see above). 

When determining if your company qualifies for a software R&D tax credit claim, just consider what advance your software project is making and what the technological uncertainties surrounding the project are.  

To avoid triggering an HMRC investigation check to make sure that your software project is eligible to receive R&D funding (see above).  

To make it easier to compile your R&D claim, add R&D tags into your source code and add detailed notes about specific R&D tasks and experimentations that have been done.  

To make sure your R&D claim is accepted by HMRC, write a solid technical narrative:  

  • Write from a technical perspective 
  • Keep it simple 
  • Avoid jargon  
  • Don’t be afraid to include details about field projects as it shows HMRC that your software project is hard to solve 

The process of claiming for software R&D tax credits can be complicated and difficult. So, contact the R&D tax credits team for help with maximising your R&D tax claim.

Your software development project doesn’t have to be pioneering or even successful to qualify for R&D tax relief. But it does need to meet two criteria:  

1. Does your project seek to create an advance in science or technology?  

To meet this criterion, you must prove you’re doing at least one of the following: 

  • Looking to achieve something that hasn’t been done before 
  • Trying to overcome constraints that haven’t been faced before  
  • Using methods that haven’t been tried before 

2. Is your project overcoming a scientific or technological uncertainty? 

When submitting an R&D claim for your software project, you need to prove to HMRC that the objective of your project is to overcome uncertainty at a technology level, and you need to show evidence that the uncertainty was not immediately resolvable. 

You can claim R&D tax relief for costs associated with your software project. These might include staff or subcontractor costs or even disposable items such as heat, light and power.  

An eligible software development project can be anything from integrating hardware and software platforms to building a tool for image processing.  

The types of activities you can claim R&D tax credits for range from conducting feasibility studies to testing products. 

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Is your business registered for Corporation Tax in the UK or are you a partnership with corporate owners?

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Have you developed new or improved existing products, processes or services in the last 2 years?

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Have you incurred any R&D costs on staff, contractors and consumables?

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Does your business employ more than 500 people, or does it have more than €86 million in turnover?

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Sorry, you must be a UK limited company or be a Partnership with corporate owners to be eligible for R&D tax credits.

In order to qualify for R&D tax credits you must be seeking to advance science or technology within your industry. As you’ve not developed any new or improved any existing innovative tools, products or services, and not re-developed any existing products, processes or services in the last 2 years. It is unlikely you have any qualifying activity. If you’re unsure, email or call us and we’ll help clarify.

In order to claim R&D tax credits, you need to either employ staff or spend money on contractors, consumable items and other items. If you’re unsure, email or call us and we’ll help clarify.

Thanks for that!

Congrats!! Based on your previous answers, you will qualify for the SME scheme. If you’d like some help maximising and securing your claim, please email or call us.

Congrats!! Based on your previous answers, you will qualify for the RDEC scheme. If you’d like some help maximising and securing your claim, please email or call us.

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