R&D Tax Credits for Software Companies
UK software companies routinely qualify for R&D tax credits worth thousands of pounds per year. If your team solves technical problems where the answer is not obvious, you are likely leaving money on the table.
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What counts as R&D in software?
HMRC defines R&D as work that seeks an advance in science or technology by resolving technological uncertainty. In practice, if a competent professional in your field could not easily work out the solution, your work likely qualifies.
Qualifying examples
- Building a new algorithm to solve a problem where existing approaches fail or are inadequate
- Integrating complex third-party systems with undocumented or unreliable APIs
- Optimising performance beyond what standard techniques can achieve
- Designing novel system architectures for scale, reliability, or real-time requirements
- Developing ML models where the approach and outcome are genuinely uncertain
Does not qualify
- ✕Building standard CRUD applications using established frameworks
- ✕Applying well-known design patterns or following documentation
- ✕Routine bug fixes, configuration changes, or dependency updates
- ✕Cosmetic UI changes with no technical challenge
- ✕Using off-the-shelf software or services without modification
How much can software companies claim?
Since April 2024, the UK R&D tax relief landscape has simplified into two main routes.
~15% net benefit after corporation tax at 25%
All profitable companies and most SMEs claim under the merged RDEC scheme. The credit is taxable but provides a reliable, above-the-line benefit.
Enhanced support for early-stage companies
If your company is loss-making and spends 30%+ of total expenditure on R&D, you may qualify for the higher ERIS rate, which can be surrendered for a cash credit.
Example: 5-person dev team
Illustrative only. Actual claim depends on qualifying expenditure, company status, and tax position. Subcontractor costs and cloud spend can increase the total further.
Common qualifying activities
Software companies qualify across a wide range of technical work. Here are the most common areas we see.
Custom algorithms & data processing
Building novel algorithms for search, ranking, recommendation, or data transformation that go beyond known techniques.
System integration challenges
Overcoming technical uncertainty when integrating third-party APIs, legacy systems, or disparate data sources.
Performance & scalability
Optimising throughput, latency, or resource usage where the solution is not readily deducible by a competent professional.
Novel architecture & infrastructure
Designing distributed systems, real-time pipelines, or serverless architectures that push beyond established patterns.
Machine learning & AI
Developing or fine-tuning models, feature engineering, and building production ML pipelines with novel approaches.
Security & cryptography
Implementing novel authentication schemes, encryption methods, or threat detection systems beyond standard practice.
API & platform development
Creating developer platforms, SDKs, or public APIs where technical uncertainty exists around reliability and developer experience.
Data architecture & storage
Designing novel database schemas, caching strategies, or data pipelines to solve problems with no obvious solution.
How CodeClaim speeds up your claim preparation
Most R&D tax credit consultants charge up to 25% of your claim and take weeks to deliver. CodeClaim analyses your GitHub repos directly and generates a draft report for your adviser in minutes.
Connect
Link your GitHub, Bitbucket, or GitLab account. We read commit history and pull requests, nothing more.
Analyse
Our AI analyses your commits against HMRC guidelines and produces a draft classification for your adviser to review.
Add your costs
Enter staff salaries, subcontractor fees, and cloud costs. CodeClaim estimates spend allocation across features for your adviser to validate.
Claim
Download a draft technical narrative and evidence pack for your accountant to review and submit.
Frequently asked questions
Common questions about R&D tax credits for software companies.
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This guide is for general information only and does not constitute tax, legal, or financial advice. Always consult a qualified tax adviser before making any R&D tax credit claim. See our Terms of Service for full disclaimers.