R&D Tax Credits for Software Companies: What Actually Qualifies in 2025

Software companies are among the most frequent R&D tax credit claimants in the UK — and among the most frequently challenged by HMRC. The line between routine software development and qualifying R&D isn't always obvious, and getting it wrong can mean an enquiry, a reduced claim, or penalties.

Here's what software companies need to understand about qualifying R&D activities under the current rules.

The Core Test: Technological Uncertainty

The same test applies to software as to any other sector. Under the BIS Guidelines and CTA 2009 s1042, qualifying R&D must seek an advance in science or technology by resolving scientific or technological uncertainty.

For software, this means the work must go beyond what a competent professional in the field could readily achieve. HMRC's guidance at CIRD81900 is specific: routine software development, even if complex, does not qualify. The key question is whether the solution required genuine investigation and experimentation because the outcome was uncertain.