By its nature, software development is experimental and involves sufficient unknowns to make it a suitable candidate for tax credits.
However, there are still basic conditions you must meet first.
R&D tax credit software development first depends on whether your company is subject to UK corporation tax.
If it is, you can then move on to see how your work might qualify. Your company must be funding the software development you’re claiming for in some way.
This funding can come in various forms, such as:
The development work may take place anywhere, including overseas, but there are different rules for claiming for either full-time employees or subcontractors.
Once you’re clear you meet the basic criteria for claiming R&D tax credits, you can then look at the details of your project, to see if it qualifies.
There are various ways in which it can do this:
The technology baseline is the state of knowledge that’s currently available in your industry. Compare this baseline to the technology goals of your development project.
Fundamentally, your project has to be about the advancement of knowledge. This might be through developing a new software product or platform, but it could also be about adding to the industry’s knowledge in a specific area of development.
To meet this criterion, your project must:
Resolution of uncertainty applies as a condition when:
Examples of software development that can qualify for R&D tax credits include:
These are only examples. Numerous, diverse projects can qualify for R&D tax credits. What matters is yours meets the criteria.
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