Have you had any bespoke software built?
If the answer’s yes, have you claimed R&D Tax Relief yet? Did you even know this was a thing?
If R&D Tax Relief is new to you, then you’ve been missing out.
What is R&D Tax Relief?
If you’ve invested in a project that’s considered to include innovation or a technical advance in your sector, the UK government has a scheme that allows you to claim a sizeable chunk of your investment against your corporation tax.
Almost everything we build innovates in this way – after all, we wouldn’t be building bespoke software for companies if there were solutions out there that already met their needs.
R&D Tax Relief is a perfectly legitimate and beneficial government scheme that many UK businesses could benefit from. But HMRC doesn’t make a big song or dance about it, nor do many accountants. This might be why you’ve not come across it before, but you may be missing out.
How do I know if my project is eligible for R&D Tax Relief?
From the R&D Relief homepage:
To get R&D relief you need to explain how a project:
- looked for an advance in science and technology
- had to overcome uncertainty
- tried to overcome this uncertainty
- could not be easily worked out by a professional in the field
People usually come to us to have bespoke software built for exactly these reasons – they’ve looked for off-the-shelf solutions, but none meet their exact needs. Most of our clients are trailblazers in their own industries, and they work with us to make their innovations a reality using technology.
Even if you don’t think you’re being particularly innovative, speak with your software developer anyway. Quite often, we’ll spend time and energy finding an innovative solution to what seems like an innocuous problem.
We don’t necessarily tell our customers every fine detail of this research because we like to focus on results, not problems – but when it comes to R&D, the biggest problems are your best source of eligibility.
You can claim R&D Tax Relief up to two years after the end of the financial year in which you paid for the software.
How much can I claim?
If your business is profitable, you can claim to up ~25% of the value of the project.
If your business makes a loss, it’s roughly 33%.
So in other words – if you’re quoted £30,000 for a piece of software, you could claim almost £10,000 back!
How do I submit a claim for R&D Tax Relief?
There are two ways to claim:
1. Speak with your accountant and ask them to advise you on how to write your own claim. Writing your own claim isn’t particularly difficult, but takes some time, and you will need an understanding of some of the technical aspects of the project. This is where your software developer should be able to help you.
2. Contact a specialist R&D claim company. They will do most of the work in writing the claim and submitting it to HMRC for you. They take a commission, of course, but this is usually a percentage of the value of the claim – so you won’t be out of pocket.
My software developer doesn’t know about the R&D Tax Relief scheme or didn’t tell me about it. Should I be worried?
The short answer is yes.
For us, software development isn’t just about writing code. It’s about nurturing a long-term relationship built on trust.
If your software developer isn’t actively looking for ways to make your investment go further (at little or no cost to them!), do they have your best interests at heart?
So what can I do now?
Simple: get in touch with us.
R&D Tax Relief is one of the first things we mention when we engage with people who need our services. We encourage every single one of our customers to check their eligibility from the very start of the journey.
We work with a company who specialise in writing R&D claims, and we would be happy to point you in their direction. We don’t benefit financially from this.
We’d be happy to answer any questions to the best of our knowledge, or point you in the right direction for anything we can’t answer.
Please note that we are not tax advisors and this article should not be taken as financial advice. Please speak with your accountant, tax advisor or specialist R&D company to learn the finer details around eligibility and the amount you can claim.