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Research & Development Tax credits for Software

Companies often spend resources on research and development. Whether you are a software consultant company or a company that outsources such activities of researching and developing in the software industry, you might be eligible for the Research and Development (R&D) tax credits.

Research and Development involves an advance in computer science or information technology. It involves finding new techniques and architectural constructs for the software and is mostly done at the algorithm, architectural or design level.

While there may be a change in application due to software change or improvements, the advance that counts in R&D tax credits is not in the application but in the technology. This means that there needs to be a science in the technology that develops the application, without which there may be no grounds for which to claim the tax credits.

Read on and find out more on whether you can make a claim and how to do it.

What Type of Software Project Qualifies?

There are several types of projects that make the cut for claiming the R&D tax credits. There are many misconceptions surrounding who can make a claim and for what type of project, but here is a list of eligible projects:

• Improvements to a software program: This involves meaningful changes that optimize the functions of the software.
• Coming up with software for new computer hardware.
• Developing or improving software for devices that already have pre-installed Operating systems like mobile phones and tablets among others.
• Coming up with software for industrial purposes such as control systems that deal with everything from data acquisition to supervision.
• Developing algorithms and applications, network engineering and coding aimed at implementing a system.
• Developing new application software or new operating systems.
• Customising software for use by a third party; this may be done by web developer and software consultant companies among others.

It doesn’t require the company to be established, as even start-ups can make the R&D tax credit claims. Most software companies tend to have this misconception.

If yours is a start-up and you have any of the mentioned projects, then you may be eligible to claim.

Claimable Expenditure

You can claim expenditure from several areas of the project including:

• Cost of staff: This includes those who worked on the project and are on the company’s payroll such as lead developers, engineers, project coordinators, and accountants, members of senior management involved in the project and quality control specialists.
• Freelancers: Those who worked on the project but are not part of the company
• Software license costs
• Consumable items like light and materials used in the project

To set up for making a claim, you should ensure that you record the whole process of the project including project objectives, the expenditure, and the activities that take place.

There are several activities that can be included in the claim including:

• Defining the objectives
• Pointing out the uncertainties
• Looking at the current technologies
• Designing the technology
• Preparing the documents that explain the advancement
• Running the tests on the program or software
• Planning and managing of the process

Where We Come In

All this may sound like a lot of hassle for you. You don’t want to waste precious time that could have been used in more constructive work aimed at maximising your company’s profits.

Well making a claim doesn’t have to be such hard work for you, and that is where our expert panel exactly comes in.

The ClaimExperts.co.uk panel does the work for you. They will take over the claim and relieve you of the pressure of meeting requirements and getting your claim approved.