Software Development

R&D in Software

Extensive research and development (R&D) is inevitably at the heart of any software development programme, but this does not necessarily mean it qualifies for tax credits.


Proving the eligibility of software development is challenging and a company must show its activity is intended to provide an advance. Use of existing software in a new application, such as to create a website, is unlikely to qualify, while bespoke coding to overcome a unique challenge is more likely to be eligible


The key is the technology behind any software development and the issues it is designed to overcome, rather than the commercial outcome. Given the potential lack of clarity, HMRC uses a group of IT experts to assess applications in this area, making expert advice essential if a claim is to be successful


Examples of eligible activities


  • Creating bespoke software to improve business
  • Development of software to support new hardware
  • Creation of new algorithms to support systems
  • Design and development of bespoke applications
  • Creation of customised control systems
  • Investment in training that supports R&D activities
  • Testing of new software