What IT Projects Qualify for R&D Tax Relief?

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In the latest UK200Group blog post, Tim Lwin, Partner Howard Worth discusses Research and Development tax relief

Tim Lwin
As the world continues to develop and the availability of digital products increases, many businesses are transitioning to IT based products and services to run or deliver a service. This has led to businesses researching and developing more innovative solutions to improve automation, collaboration and services for both staff and clients.

By undertaking these activities a business could qualify for the government’s Research and Development (R&D) Tax Relief scheme and save thousands of pounds in tax to be used elsewhere in the business or to continue to innovate products and services.

“The trend towards digitalisation, on-line transactions, social media and cloud based operations has seen an increasing number of R&D tax relief claims for software development and software related projects.” Says Tim Lwin Tax Partner at Howard Worth Accountants and Business Advisers.

Howard Worth a selection of successful claims are: an ink cartridge distributor, a furniture retailer, a car fleet provider and a finance provider undertaking IT projects such as hiring IT directors or outsourcing projects to software programmers to develop bespoke e-commerce platforms to integrate their operations from web advertising to purchases to stock orders to delivery to CRM updates.

There have also been claims for solicitors where off-the shelf products have been upgraded to allow cloud access.

If your business is undertaking the following software projects, you should qualify for R&D tax relief:
•Developing new operating systems or languages.
•Creating new search engines using materially new search methods.
•Resolving conflicts within hardware or software, where the existence of a problem area and the absence of a known solution have been documented.
•Creating new or more efficient algorithms whose improvements depend on previously untried techniques.
•Creating new encryption or security techniques that do not follow established methodologies.
•Development of new solutions/technologies
•Creation of bespoke integration design and protocols.
•Development of specialised components and packages.
•Improvements to existing systems to improve performance, security, availability or efficiency.
•Use of Java/NET technologies to redesign and enhance existing terms/solutions to enable shared access Cloud services.
•Augmentation of systems involving storage, retrieval and analysis of large quantities of data.
•Development of complex simulation models to provide better analytics and risk management.
•Development of flexible scalable engines/platforms to automate complex processes and workflows.
•Systems integration involving unknowns and uncertainties behaviour of individual components

The costs involved in the above may include salaries of newly appointed IT staff, third-party costs of software providers and components for IT upgrades (i.e. servers). These costs are then enhanced to reduce the taxable profit leading to tax savings and cash refunds.

To find out more or to see if your company or clients companies qualify for R&D Tax Relief contact us by phone 01606 369700 or email: TimLwin@howardworth.co.uk


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