{"id":1887,"date":"2024-01-31T13:48:01","date_gmt":"2024-01-31T13:48:01","guid":{"rendered":""},"modified":"2026-07-26T16:24:04","modified_gmt":"2026-07-26T14:24:04","slug":"claiming-rd-tax-credits-for-software-development-projects","status":"publish","type":"article","link":"https:\/\/leyton.com\/uk\/insights\/articles\/claiming-rd-tax-credits-for-software-development-projects\/","title":{"rendered":"Claiming R&amp;D Tax Credits for software development projects"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"1887\" class=\"elementor elementor-1887\" data-elementor-post-type=\"article\">\n\t\t\t\t<div class=\"elementor-element elementor-element-66ac5be e-flex e-con-boxed e-con e-parent\" data-id=\"66ac5be\" data-element_type=\"container\" data-e-type=\"container\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-6b532129 elementor-widget elementor-widget-text-editor\" data-id=\"6b532129\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t\t\t\t\t\t\n<p class=\"wp-block-paragraph\">Software development is essential for driving some of the UK\u2019s most exciting industries, such as cybersecurity, fintech, robotics, artificial intelligence, medical technology, telecommunications, and quantum computing.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It also plays a huge role in supporting innovation across a wide range of industries, often supporting advanced R&amp;D projects with new ways to capture and analyse data to unlock breakthroughs. The <a href=\"https:\/\/www.gov.uk\/government\/publications\/government-response-on-software-resilience-and-security\/government-response-to-the-call-for-views-on-software-resilience-and-security-for-businesses-and-organisations\">UK government<\/a> even goes as far as saying: \u201cSoftware is the lifeblood of the digital economy. It underpins all of the digital services we rely on, driving productivity and growth across the UK.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">To help drive this productivity and growth, HMRC incentivises research and development software development projects by allowing cutting edge businesses to claim <a href=\"https:\/\/majjane.leyton.com\/uk\/r-and-d-tax-credits\/\">R&amp;D Tax Credits<\/a> on qualifying expenditure.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In this article, we explain the ins and outs of how to claim R&amp;D relief for software development projects.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Does software development qualify for R&amp;D Tax Credits?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Yes! There are two ways in which software development might qualify for R&amp;D Tax Credits:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>It\u2019s part of a larger project that needs software development to achieve a separate scientific or technological uncertainty.<\/li>\n\n\n\n<li>The software development is the end goal of the R&amp;D project.<\/li>\n<\/ol>\n\n\n\n<h2 class=\"wp-block-heading\">What software development projects are eligible for R&amp;D Tax Credits?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">For a software development project to be eligible, it needs to be classed as having qualifying R&amp;D activity (as with any other R&amp;D project).<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This means that your software development project must:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>look for an advance in science and\/or technology<\/li>\n\n\n\n<li>face uncertainty with achieving this<\/li>\n\n\n\n<li>try to overcome the uncertainty using a systematic approach<\/li>\n\n\n\n<li>not have a solution that a competent professional can easily work out.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">What software development costs are eligible for R&amp;D Tax Credits?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">There are a variety of different costs that can be claimed for, including consumables, staff costs, externally provided staff, subcontractors, software licences, data licences and cloud computer storage. You can find out more by reading our article: <a href=\"https:\/\/majjane.leyton.com\/uk\/insights\/articles\/what-qualifies-as-rd-expenditure-for-claiming-tax-relief\/\">What qualifies as R&amp;D expenditure for claiming tax relief?<\/a><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Can I claim R&amp;D relief for the entire software development project?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Only the activities that directly or indirectly contribute to R&amp;D are eligible for relief. For example:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>work that directly aims to break technological boundaries or solve complex problems<\/li>\n\n\n\n<li>anything that involves the practical implementation of a non-trivial solution<\/li>\n\n\n\n<li>any testing or experimentation to resolve technological uncertainties.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Work that isn\u2019t likely to be eligible includes:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>routine testing or maintenance<\/li>\n\n\n\n<li>assessing and adopting existing technologies without advancing their capabilities.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Work that indirectly contributes to part of the R&amp;D project, such as training, admin costs or maintaining computers, can also be claimed. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">You must apportion costs based on how much something is used for an R&amp;D project. For example, if an IT technician spent 50% of their time on a software development project, you can claim 50% of their salary. Similarly, if you used 25% of your cloud computing storage space for a particular development project, you could claim 25% of the costs.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What are examples of software development R&amp;D projects?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Below, we list potential examples of qualifying projects that might be eligible for claiming R&amp;D Tax Credits.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Developing a new algorithm that detects unusual activity within a bank account.<\/li>\n\n\n\n<li>Creating a plugin for a writing app that automatically suggests sentence revisions based on a company\u2019s style and brand guidelines.<\/li>\n\n\n\n<li>Developing a new tool that converts code from one programming language to another.<\/li>\n\n\n\n<li>Designing software drivers for connecting a new medical imaging device to a hospital\u2019s computer network.<\/li>\n\n\n\n<li>Creating a virtual reality (VR) integration for a fitness app.<\/li>\n\n\n\n<li>Improving the machine learning\/artificial neural network (ML\/ANN) of card fraud detection software.<\/li>\n\n\n\n<li>Creating an AI-powered cybersecurity tool.<\/li>\n\n\n\n<li>Developing a security server for a cloud migration project.<\/li>\n\n\n\n<li>Enhancing a video streaming application.<\/li>\n\n\n\n<li>Developing an ANN capable of analysing digital images of human faces to determine if they are real, edited or AI-generated.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">HMRC\u2019s <a href=\"https:\/\/www.gov.uk\/hmrc-internal-manuals\/corporate-intangibles-research-and-development-manual\/cird81980\">software case studies<\/a> give a detailed breakdown of fictional examples, including what work would and would not be considered qualifying Q&amp;D activity within the projects.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">You can also find out more able examples of qualifying software projects by reading our case studies:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/leyton.com\/uk\/case_study\/real-wireless\/\">Real Wireless<\/a>:\u00a0An independent wireless advisory firm working with government departments, industry and user clients.<\/li>\n\n\n\n<li><a href=\"https:\/\/leyton.com\/uk\/case_study\/shark-finesse\/\">Shark Finesse<\/a>:\u00a0A pioneering value management software firm helping companies build business cases for further investment.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Does it matter if my software development R&amp;D project isn\u2019t commercial?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">No. It\u2019s absolutely fine for R&amp;D tax purposes if the software that you\u2019ve developed is used in-house for your company only or if you licence or sell it for commercial use.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Do computer\/video games count as software development for claiming R&amp;D relief? <\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">While computer\/video games can be ground-breaking and innovative, including the animation and programming, they are not always classed as R&amp;D for tax purposes.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Developing innovative new code may be eligible, but advances in computer graphics or telling exciting stories won\u2019t qualify.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">There is, however, a separate <a href=\"https:\/\/majjane.leyton.com\/uk\/creative-industry-tax-reliefs\/\">Creative Industries Tax Relief<\/a> for if your video game has been certified by the British Film Institute (BFI) and will be on commercial sales to the general public. You will only be able to claim for either a Creative Industry Tax Relief or for R&amp;D Tax Credits &#8211; not both.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">How Leyton can help<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">One of the main areas of confusion for businesses is that because software use by its very nature can be cutting-edge, so trying to identify what is an \u2018advance\u2019 or what is a \u2018technological uncertainty\u2019 might not always be straightforward. What was ground-breaking just two years ago may not be eligible today. That\u2019s where we can help.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Not only are we constantly up to date with the latest innovations and industry advancements, but our consultants are experts in their field and understand the intricate details of software applications when it comes to R&amp;D. As such, they\u2019ll be able to determine what counts as qualifying expenditure when claiming R&amp;D Tax Credits for software projects.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Over 60% of <a href=\"https:\/\/majjane.leyton.com\/uk\/software\/\">software businesses<\/a> are eligible for R&amp;D Tax Credits, so it\u2019s well worth <a href=\"https:\/\/majjane.leyton.com\/uk\/contact-us\/\">getting in touch<\/a> to see how you could benefit.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">If you enjoyed this article, you may also like:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/leyton.com\/uk\/insights\/articles\/five-critical-technologies-that-are-key-to-the-uks-innovative-future\/\">Five critical technologies that are key to the UK\u2019s innovative future<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/leyton.com\/uk\/insights\/articles\/how-software-companies-can-prepare-for-an-rd-tax-relief-claim\/\">How software companies can prepare for an R&amp;D Tax Relief claim<\/a><\/li>\n<\/ul>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>Software development is essential for driving some of the UK\u2019s most exciting industries, such as cybersecurity, fintech, robotics, artificial intelligence, medical technology, telecommunications, and quantum computing. It also plays a huge role in supporting innovation across a wide range of industries, often supporting advanced R&amp;D projects with new ways to capture and analyse data to [&hellip;]<\/p>\n","protected":false},"author":115,"featured_media":1964,"menu_order":0,"comment_status":"open","ping_status":"open","template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[138,143],"tags":[624,532],"expertise":[468],"class_list":["post-1887","article","type-article","status-publish","format-standard","has-post-thumbnail","hentry","category-rd-tax-credits","category-software","tag-innovation","tag-rd-en","expertise-rd-tax-credits"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v28.1 (Yoast SEO v28.1) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Claiming R&amp;D Tax Credits for software development projects - Leyton United Kingdom<\/title>\n<meta name=\"description\" content=\"We explain how to claim R&amp;D Tax Credits for software development projects, with examples of what is and isn\u2019t eligible for tax relief.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/leyton.com\/uk\/insights\/articles\/claiming-rd-tax-credits-for-software-development-projects\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Claiming R&amp;D Tax Credits for software development projects\" \/>\n<meta property=\"og:description\" content=\"We explain how to claim R&amp;D Tax Credits for software development projects, with examples of what is and isn\u2019t eligible for tax relief.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/leyton.com\/uk\/insights\/articles\/claiming-rd-tax-credits-for-software-development-projects\/\" \/>\n<meta property=\"og:site_name\" content=\"Leyton\" \/>\n<meta property=\"article:modified_time\" content=\"2026-07-26T14:24:04+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/leyton.com\/wp-content\/blogs.dir\/9\/files\/2024\/01\/GettyImages-918035432_711x455px-1.webp\" \/>\n\t<meta property=\"og:image:width\" content=\"711\" \/>\n\t<meta property=\"og:image:height\" content=\"455\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/webp\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/leyton.com\\\/uk\\\/insights\\\/articles\\\/claiming-rd-tax-credits-for-software-development-projects\\\/\",\"url\":\"https:\\\/\\\/leyton.com\\\/uk\\\/insights\\\/articles\\\/claiming-rd-tax-credits-for-software-development-projects\\\/\",\"name\":\"Claiming R&amp;D Tax Credits for software development projects - 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