Tax Credits for R&D

Has anyone here (U.K. based) ever claimed or looked into Tax Credits for software R&D? If you write software for a living or as part of your job you could be eligible for 150% (instead of 100%) or your R&D costs (hardware, software and WAGES) written off against tax. Needless to say this could be very useful. I'm looking into it now.

Check this:

http://www.hmrc.gov.uk/randd/

and this:

http://news.bbc.co.uk/1/hi/technology/4202354.stm

Don't forget to mention that that sounds like a UK tax thing, the majority of the people on these forums are from outside the UK. :-)

Actually I think a similar things exists in the U.S., but I've edited above anyway.

Go and talk to the girls and boys at the local Business Link office, or the local chamber of commerce.

As long as it's free, I'll give it a go. Problem is finding a way of making the R&D sound "innovative" or whatever so it is a valid claim I guess.

... and I think you have to be investing at least £10,000 in it to count

Sounds like a great money making scheme but surely there must be a catch somewhere?

I can set up a company and research...mmmm occlusion algorithms for 3D games, yes I'll R&D this for the next 30 years and they will pay me to do it!

Maybe they wouldn't be too impressed if they see the only profit coming in is their tax credits though lol

quoted from http://www.hmrc.gov.uk/randd/#4

I understand that the company must also have turned over £10,000 in the period.

Yeah my company has turned over lots more than £10K and I have paid myself more than this. Therefore I can claim my salary as R&D as a lot of the time I should have been doing contract work I was making games!

Shambler: Sounds like you've misinterpreted, they don't pay you; simply you write your expenses of against profit at 150% instead of 100% and thus end up paying less tax at the end of the year if you're in profit (and I am).

I meet all the criteria except I am worried about this part of the doc "[It] will be R&D for tax purposes if the project seeks to achieve an advance in overall knowledge or capability in a field of science or technology, not a company’s own state of knowledge or capability alone." because I need to be saying that my coding has increased overall knowledge in the field of IT technlogy and how do i do that? Can I bambuzal a tax inspector with talk of quintuple buffer dirty rects systems or not?

Jake, ask yourself this... How did that company in the BBC article manage to claim back 85% of it's game developments costs. How does a RTS or FPS provide and advance in knowledge of capability?

Yeah that's what I was thinking! But how did they fill out the forms and get it past the Inland Revenue then? I want to do it too, but need to be confident in saying the right stuff to get my claim accepted.

I was under the impression that 'expenses' included paying someone to do the R&D, namely me! ;)

Get an accountant to do it. They cost money, but with this sort of thing it can often pay for itself.

I have an accountant but you need one who knows about this stuff and IT who can talk the talk on the tax forms.

It's just a box you fill in on your CT600.

http://www.hmrc.gov.uk/ctsa/forms/ct600_2002.pdf

Section 4, box 149. Any accountant worth its salt should be able to claim it for you, you'll just need to discuss with them what costs count as R&D.

Er, but if you're only self employed like me and use self assessment you probably won't be able to claim. If you think you'd be able to save some money through this scheme it might be worth a small bit of hassle getting yourself incorporated. :)

teamonkye: Hey that's cool it's just a few boxes, no explanation needed or anything. What I wonder then is if anyone contacts you about it to "review your case" or anything.

I own a Ltd company so it's no problem for me to make the claim.