R&D tax relief for software innovation

The software industry is one of the best places to find innovation in everyday business, but what kind of project qualifies for an R&D software claim?

Check Your Eligibility

R&D tax relief in the software industry

According to statistics published by HMRC in Autumn 2020, the Information and Communication sector submits the second highest number of claims and receives the third highest amount of R&D tax relief. 

These claims include pure software companies, as well as companies who do not operate in the software field but who have advanced science and technology in the software field, creating internal management systems to improve their business operation. 

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engineer working on qualifying R&D tax relief project


Saving for a cyber security specialist

Development of products to prevent attacks on APIs. Developing such solution for APIs is difficult due to the level and complexity of traffic created. Working at the forefront of their field, the company faced uncertainties surrounding processing a variety of possible data types, structuring data in a specialised way whilst processing it quickly.


Saving for a logistics company

Innovative technology solutions to meet warehousing, fulfilment and contact centre requirements. The solutions developed enable businesses to fully integrate with client systems for visibility from order receipt through to delivery. Uncertainties faced included rationalising data , incorporating complex reporting channels, and eliminating downtime.


Saved for a software company

R&D carried out by the company involved the development of new platforms and features, including functionality to centralise import processes and replace manual processes, reconciling batches of data, as well as a platform to process payments. The company have also conducted R&D in developing intelligent solutions for data capture from forms.

Which software projects qualify for R&D tax relief?

The R&D must take place within a computer software project that seeks to achieve an overall advance in computer science or information technology, or an advance in overall knowledge or capability in computer science or IT. It has to be seen as an overall advance in software technology and not just a company advancing it’s own knowledge and systems.

This will often involve the search for new software constructs or new architecture techniques. It’s important to note that the objective of the work must go beyond routine analysis, copying or adaptation of an existing software product or software process.

When it comes to R&D tax relief in software, the advance needs to be made in the technology layer, not the application of said technology. Usually this will involve the existing baseline in technology at the start of the project being advanced beyond known capabilities. We would expect that most of the development work that qualifies is done on the back end systems rather than the front end the user sees.

Here are a few examples of the types of R&D activity in software projects which would be eligible for R&D tax relief:

  • Defining technical objectives or technical requirement analysis
  • Technical feasibility studies and technical planning for the R&D elements of the project.
  • Analysing, designing, developing, and building the technology.
  • Producing technical specification or other documents to explain and support the R&D project and advance.
  • Testing the product, process, or software (excluding functional testing)

Which software companies have claimed R&D tax relief with Radius?

Radius has helped dozens of companies operating in the information and communications sector to save hundreds of thousands of pounds in R&D tax reliefs, including:

  • £35k+ for a software development company
  • £140k+ for a cyber security specialist
  • £55k+ saved for a waste management company
  • £70+ saved for a retailer
  • £50k+ saved for a logistics company
  • £50k+ for a skills development tech company
  • £20k+ for a business management consultancy
  • £15k+ for a specialist marketing provider

How Radius can help your business

First and foremost, Radius will assess your project and, if it qualifies and as part of our claims process, will prepare a technical report to demonstrate to HMRC the advance in software technology, and all technical uncertainties that had to be overcome. This means the technical input required from the software developers to attempt to achieve the advance, even if ultimately, they were not able to, or only partly achieved it.

Radius will work with you to maximise your claim within the legislative scope set out by HMRC; the team will do all the hard work, including technical report production and any summary documents required as part of the claim process.

Check your eligibility

Answer 11 simple questions to see if you are eligible for R&D tax relief for software

Read about more industry specific case studies in our free guide

Radius Case Study Guide

  • Download the free guide

    Download our practical and industry specific guide to R&D Tax Relief claims. The aim of this guide is to give real life examples of successful claims to demonstrate the type of activity which qualifies.

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    R&D Tax Relief Claims Guide front cover