RD Relief
R&D Tax Credits for FinTech
The software underpinning RDRelief was sold to one of the big-4 professional service firms in 2018. Consequently, the brand is no longer in operation.
- R&D Tax Advisors are invited to find out more about the Inspired.tax claim preparation software.
- Otherwise, please feel free to continue to browse this website for useful information regarding claiming R&D Tax Credits in the UK. However, beware that none of the information has been updated since 2018.
Contents
Background
Financial Technology (FinTech), has been a significant area for R&D Tax Credit claims since the start of the relief back in the year 2000. The reason why FinTech projects are often considered R&D is that they frequently have stringent technical requirements, not least around security. Where these cannot be solved by off the shelf solutions (owing to factors such as the combinations of legacy systems and other restrictions) R&D is often required.
Eligibility Criteria
Main article: Eligibility Criteria
The UK R&D eligibility criteria apply to all fields of Science and Technology rather than just FinTech. They state:
- An R&D project must seek to achieve an Advance in Science or Technology
- The team must attempt to overcome Scientific or Technological Uncertainty in developing the Advance
Technological Advance in FinTech
Main article: Scientific or Technological Advance
FinTech systems often need to adhere to extremely high-performance requirements (low latency and high scalability). The appreciable improvement of a system, to increase these types of Technological metric is often qualifying, provided that the work undertaken is not a standard/routine one (e.g. provisioning more hardware resource or following a standard process to uplift the performance).
Most FinTech systems also have a long list of functional requirements (e.g. support for a particular type of exotic derivative). Such 'functional' requirements would not qualify as a 'Technological Advance' in its own right (as HMRC would view it as functional, rather than Technological). However, if creating the new functionality required the development of new high-performance algorithms (or a similar development of 'new' Technology - rather than using Technology), then this would bring the project into the realms of becoming research and development for tax purposes.
Technological Uncertainty in FinTech
Main article: Scientific or Technological Uncertainty
There are often numerous forms of Technological Uncertainty in achieving the types of FinTech Advances above, which makes FinTech an area that is ripe for R&D Tax Credits.
Owing to the nature of systems typically developed within the FinTech sector, we find that the competent professionals often know that it would in some way be possible to achieve the Advance, but the Uncertainty concerns producing the Advance in practice. That is how to modify the underlying algorithms and data structures to develop a secure but high-performance solution.
Includable Activities
Main article: Directly Contributing Activities
As with software development in general, time spent analysing requirements for FinTech projects would typically be excluded from an R&D Tax Credits claim. You can include time spent architecting, developing, testing and project managing the build of the Technology - so long as they were required to overcome Technology Uncertainty.
Example of a Successful Claim
This article provides an example of an R&D Tax Relief claim prepared for a FinTech company based in Manchester.