Innovation in Digital Industry
The world has been undergoing a digital transformation for years, but the pandemic has accelerated this transformation more than ever before. Hence in the past two years of the pandemic, we all have witnessed an immense increase in innovation in the digital industry and its impact. The improvement in user experience and enhancement in analytics, marketing and search engine optimisation, the digital industry has experienced innovation everywhere. Digital and advertising agencies can benefit from this innovation by claiming R and D tax credits. R and D tax credits are a great way to make your business thrive; with extra funding you can claim back against all your investments in the advancement of science and technology. Digital agencies have great potential to get funding as R and D tax relief or cash credits, but only a few businesses realise their daily routine activities might qualify for the claim. This blog will explain R and D tax credits and how R&D claims can help the digital industry grow.
How Can You Claim R and D Tax Credits?
R and D tax credits scheme is the most lucrative scheme to reward businesses contributing with their science and technology innovations. R&D schemes are very generous, they allow any company carrying out qualifying research and development activities or projects to claim R and D tax relief or credits regardless of their size or domain. And you can make an R&D claim for the last two accounting periods.
What is R&D, and what are the qualifying activities? Any company intending to bring some new addition to science and technology by developing their own product, improved process or service might qualify for the claim. And if your project qualifies, you are allowed to claim against the following expenditure related to your R&D project:
- Staffing costs
- Consumables
- Software development or licence costs
- Subcontracted R&D
- Externally provided workers
- Clinical trials
Examples from the Digital Industry Which Qualify for the Claim?
Today, digital agencies are involved in innovation in numerous ways ranging from creative to technical innovation, such as digital marketing, search engine optimisation, web development, social media promotions and online marketing. All these examples of innovation involve R&D and hence are eligible for R and D tax credits claims.
Some other examples of the digital industry are:
- Development of programmes
- Integrating case management systems to develop customised software
- Development of new analysis tools
- Development of new enhanced data collection tools
- Automation of processes to meet customer needs
- Development of customised applications
- Development of new algorithms for data search and analysis
- Development of unique reporting systems
- Developing AI and machine learning for customer needs
- Integrating virtual reality and augmented reality experiences to create new processes or services
- Applying business intelligence algorithms to enhance reliability and advance functionality
- Creating bespoke software
- Advancement in platform functionality
- Creating SEO auditing tools
- Creating software to bring data from various sources together
- Developing bespoke middleware
- Integrating CRM with other databases and software
The digital industry has fierce competition, and R and D tax credits can give competitive advantages to your agency. Even if your R&D project is unsuccessful, HMRC still allows you to claim investments made to bring innovation in technology through research.
What Does Not Qualify for the Claim?
Claiming for the wrong projects can negatively impact your claim; therefore, it is important to be clear about what you can claim for and what doesn’t qualify. Following are some examples from the digital agencies that do not qualify for the R and D tax credits claim:
- The digital industry revolves around creativity, having numerous creative roles, but under the R and D tax credits scheme, you can only claim for technical innovation, not creative innovation.
- Market research involves research, but it does not qualify for the claim according to HMRC guidelines. You can claim for creating the tools for data collection but not for researching the market.
How Can We Help You Claim?
We have observed that a huge number of digital agencies do not claim R and D tax credits, and those who claim do not realise their full potential and miss the number of costs that qualify for the claim. Square Finance has been working for years to assist companies from all domains to recognise their potential and get maximum R&D incentives.
Are you a UK-based company investing in innovation? No matter which domain you are working in, if you believe your projects involve research and development, then make sure to take advantage of highly profitable R&D funds. Get in touch with our experienced R&D tax specialists, who will help you get your R and D tax credits within a few seamless steps. We can quickly hunt down all your eligible projects, tailor a maximised claim, and submit it on your behalf. So start your R&D claim process with our competent R&D tax specialists.