Most of the companies in the financial sector presume that they are not developing anything new. Therefore, they are ineligible for receiving R&D tax relief, which is not valid. However, finance companies have evolved worldwide, and now financial services are driven by the latest technology. This accelerated technological advancement in the financial services sector, including banks, trading, mortgage, or insurance companies, makes them eligible to receive R&D tax relief. Therefore, if you are a finance company and have developed any new software, have created a new service, or developed proprietary systems, you may fall under the eligibility criterion, and huge R&D tax relief is waiting for you a few steps away.
Today financial services are a technology-based sector known as Financial Technology or FinTech. Innovation in the financial industry is not just limited to the creation of software systems. This sector is constantly striving and investing in bringing advancement to increase efficacy and meet clients’ requirements.
This blog intends to make the financial sector aware of the qualifying activities they might be undertaking unknowingly so that no finance company misses out on the R&D tax relief they deserve.
What Qualifies for R&D Tax Relief?
According to HMRC guidelines following are the expenditure which qualifies for the R&D tax relief:
Cost of employees directly involved in eligible R&D work.
You can claim against 65% of your subcontracted R&D project cost.
Materials/Consumable Items Cost:
Expenditure of consumable material employed in the R&D project.
Resources & Utility Expenditure:
Expenditure of fuel, power, water and other utilities and resources utilised.
cost of software license bought for the R&D work.
Which Financial Sector Activities Might Qualify for R&D Claim?
If your company is involved in any following activities, your projects might fall under research and development, and you might be eligible to claim R&D tax relief.
- Designing and developing new and advanced software
- Creation of latest analysis tools
- Bringing in new data mining methods
- Development of proprietary financial software system for additional services
- Designing models to facilitate asset management
- Devising models for the prediction of inflation rates
- Designing algorithms for the detection and prevention of fraud
- Creation of a real-time stock exchange processing system
- Creation of new identification methods for the advancement and improvement in user privacy
- Development of new financial models
- Creation of risk management systems
- Development of quantitative research tools
- Research and designing algorithms for trading platforms
- Creation of blockchain technology for the secure transaction of digital currencies like cryptocurrency
- Development of proprietary user tools and banking systems
- Integrating legacy systems
- Creation of real estate systems
- Development of market data systems
- Creation of new protocols for data design and processing
- Development of a new approach for institutional infrastructure reuse.
- Development of new methods to access legacy systems solving security issues
- Advancement in calculation engines
- Advancement in artificial intelligence for predictive modelling and statistical analysis
- Development of innovative data storage and retrieval methods
Contrary to the other innovative sectors which create or improve equipment, engine and devices financial industry is much more complicated and does not usually produce any physical equipment. The financial sector is rapidly evolving, and you might not be aware of these underlying technological advancements.
The financial sector has complex technological needs such as data processing, ensuring data security, secure transactions, and compliance that demands the development and advancement of IT sectors. All this research and progress can be valuable for the financial industry, as HMRC aims to provide R&D tax relief to all the sectors working for R&D projects. However, most finance companies undertake the aforementioned activities unknowingly that these tasks qualify for the R&D claim.
How Can Square Finance Help You?
The Square Finance team consists of R&D tax relief specialists who have years of experience n assisting various sectors in making R&D claims. We focus on each client, look deep into your business to uncover hidden qualifying activities and provide you optimised claim in every possible way. We have expertise and experience working with small and large organisations, and we have helped them recognise their eligible activities to maximise their claims. If you are looking for an R&D tax credit expert to handle your claim feel free to contact us.