Tax Savings for Creating Algorithms

Many companies that have created algorithms have obtained tax savings with the help of our Radius team.

This has been possible because we have claimed R&D tax reliefs for these companies on the costs (mainly a proportion of staff wages) that they have incurred creating new or more efficient algorithms.

R&D tax reliefs allow qualifying companies to claim corporation tax savings of around £25,000 for every £100,000 they have spent on qualifying R&D projects. Please click here for more details on how R&D tax reliefs operate.

This has been possible because ‘creating new or more efficient algorithms whose improvements depend on previously untried techniques’ is specifically mentioned by HMRC in their guidance on R&D tax reliefs as being an activity that is likely to qualify for relief.

We have claimed R&D tax reliefs on creating algorithms for a range of companies including software developers, manufacturers getting algorithms written for bespoke software and IT companies who write algorithms to knit together different systems.

There are other criteria that need to be satisfied before a successful claim can be assured but the key message here is that any company that has paid someone internally or externally to create new or more efficient algorithms should ensure that they have explored the availability of R&D tax reliefs on the work undertaken.

It is likely that there are many companies who have created new algorithms who are missing out on valuable tax savings.

If you wish to find out more about how creating algorithms can qualify for R&D tax reliefs then please contact the Radius team to arrange your free consultation and let us help you to make your innovation pay.