R&D Tax Relief for Web Developers

Date: 16th April 2013

Website Developers should certainly be claiming any R&D Tax relief for the software development element of their work such as e-commerce, database management, intranet integration and other similar activities.
So, should you be claiming? Well here’s how you can tell.

First, ask yourself a few quick questions:

  1. Do we spend time designing web based applications rather than just creating websites?
  2. Do we consider that our web based applications are creative and innovative?
  3. Do our software developers have to trial, check out possible solutions and experiment before we have a stable and working web based application?
  4. Are we constantly trying to offer more competitive and innovative solutions for our clients?

If this sounds like your business, then you should certainly seek advice on whether you should claim. In straight forward terms, a bog standard website creator probably cannot claim; but as soon as you add web based applications such as social media tools, e-commerce, custom intranet capabilities…….then you are probably applying science or technology to create technical advances or competitive new solutions.
Much of R&D Tax relief claims are based on the PAYE bill of the business and so it will be particularly worthwhile if you employ software development people; not the graphic designers, but rather the actual web based software developers. Be aware though that dividend income can not be part of a claim, it must be PAYE.
The current HMRC rules allow you to claim for the previous two full company tax years as well as the current year. It only takes a couple of PAYE employees to rack up a very useful claim! Just make sure you seek advice before your year end or you lose one of the previous two periods, and that can be very annoying……
Best advice is to talk to an R&D Tax Credit specialist, preferably someone that is used to dealing with software claims.

Look for the “Intellect” sign on their website or emails. This means they are members of Intellect, the Software Technology Trade Body, and understand software developers.
Speaking to an R&D Tax Credit specialist and asking for an initial assessment should cost you absolutely nothing. The Government wants to encourage innovative businesses like yours and it is not just about rocket science.
Most R&D Tax specialists charge a success fee. You should expect to pay around 12.5% of what you receive as a rebate, corporation tax credit or relief. The good news is that your specialist will help you claim back for the two previous full years as well as for the current year.
Make sure that you use your own Accountant to submit the claim. Some R&D Tax firms try to up the fees by recommending their own Accountant. It’s just not necessary and you should submit your claim through you own trusted professional.

Article Comments

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14th July 2016

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