Under the current rules, you’ll be claiming through the merged R&D scheme — in place for accounting periods starting on or after 1 April 2024 — which replaced the old separate SME and RDEC schemes.
Here’s how it works in practice:
- You get a 20% above-the-line tax credit on your qualifying R&D spend. Staff costs, subcontractors, software licences, consumables and certain other costs can all potentially count.
- The claim goes on your company’s CT600 company tax return, with an additional information form submitted to HMRC in support of it.
- If this is your first claim (or you haven’t claimed in the last 3 years), you must pre-notify HMRC — within 6 months of the end of your accounting period — or the claim is invalid.
For a software company, the key test is whether you’re resolving scientific or technological uncertainty. Routine development, cosmetic changes and bolting together off-the-shelf tools usually don’t qualify. Document your projects as you go: what the uncertainty was, how you tried to resolve it, and the time and costs involved — HMRC increasingly asks for this evidence.
Practical tips:
- Talk to your accountant before your year-end, not at filing time — the pre-notification deadline catches a lot of first-time claimants out.
- Loss-making companies can generally surrender the credit for a cash payment, which is often the most valuable part for an early-stage software firm.
- If your qualifying spend is mostly subcontracted, check the rules carefully — the merged scheme has specific restrictions on overseas subcontractors.
Get the claim right first time and it’s a significant benefit — but HMRC compliance checks on R&D claims have ramped up, so make sure the technical narrative is solid.
