26th June 2025

LimestoneGrey – A Practical Guide to Software R&D Tax Claims: Following HMRC’s Guidance

In the med-tech and life sciences sector, software is often integral to innovation. While software that simply supports a larger R&D project (e.g., for basic data capture) can be an allowable cost, a different level of scrutiny applies when the primary advance is the software itself.

For projects like a new AI diagnostic platform or a complex data analysis tool, it’s not enough for the application to be new and commercially innovative. HMRC will look for evidence of an advance in the underlying software technology. You must demonstrate how you are advancing computer science or software engineering, not just applying established coding principles to a new set of medical data. The claim must show that a competent professional would find the underlying technological challenges to be non-trivial and uncertain at the outset.

With software claims under increased scrutiny, it is critical that businesses understand and follow HMRC’s guidance for software development projects. In this article, LimestoneGrey discusses the key hurdles claimants need to overcome and provides tips on how to deal them.

Learn more software R&D tax claims here.