July 8th, 2026 at 08:04 am
Can You Claim R&D Tax Credits on App Development?
Yes — in many cases, you can. The key test is not whether you built software, but whether the work advanced science or technology and involved uncertainty that a competent professional could not easily solve. That is why some app projects qualify strongly, while others do not qualify at all.
For founders, the practical takeaway is simple: if your team had to solve a hard technical problem, build something non-obvious, or overcome a genuine engineering limitation, there may be a claim worth making.
- App development can qualify if it advances science or technology and overcomes technological uncertainty.
- The merged RDEC scheme applies to accounting periods beginning on or after 1 April 2024.
- ERIS applies to loss-making R&D-intensive SMEs where qualifying R&D is at least 30% of total expenditure from 1 April 2024.
- HMRC requires an Additional Information Form for claims submitted from 8 August 2023.
- First-time claimants and some dormant claimants must also submit claim notification in advance for periods starting on or after 1 April 2023.
What Changed in Years:
The UK R&D tax landscape changed significantly. The old separate SME and RDEC schemes were replaced for accounting periods beginning on or after 1 April 2024 by the merged RDEC scheme, and a new ERIS route was created for loss-making R&D-intensive SMEs. The R&D-intensive threshold was also lowered from 40% to 30% of total expenditure.
That means the question is no longer just “can I claim?” but “which regime applies to my company, and how much of my spend is actually qualifying?”
Does App Development Qualify?
App development can qualify where the work seeks a technological advance and solves uncertainty. This can include things like:
- Novel machine-learning implementation.
- Difficult cross-platform performance optimisation.
- Bespoke infrastructure or architecture design.
- Integration problems with no clear public solution.
- Non-obvious security or scalability challenges.
It usually does not include:
- Routine CRUD development.
- Standard API integrations.
- Cosmetic UI redesign.
- Basic bug fixing.
- Straightforward feature implementation using well-known methods.
The strongest claims usually sit in the grey areas where the team had to test, fail, adjust, and engineer a solution that was not obvious at the outset.
What Costs Can You Claim?
If the project qualifies, the following cost categories may be included:
- Staff costs, including PAYE salary, employer NICs, and pension contributions.
- Subcontractors, under the rules of the merged scheme.
- Externally provided workers.
- Cloud computing costs.
- Data licence costs.
- Software licences.
For app businesses, cloud and data costs can be especially important because modern development often depends on hosted environments, training data, test infrastructure, and third-party tooling.
Merged RDEC vs ERIS
The merged RDEC scheme is the default route for many companies from 1 April 2024 onward. It provides a gross credit based on qualifying expenditure, with the net value depending on corporation tax treatment. For many profitable companies, the net benefit is roughly in the mid-teens as a percentage of qualifying spend.
ERIS is the higher-value route for loss-making SMEs that are R&D-intensive. If your qualifying R&D is at least 30% of total expenditure, ERIS can deliver a materially larger benefit than the merged scheme.
Worked Example
Example calculation demonstrating potential R&D tax relief for a £75,000 qualifying app development project in the UK.
Imagine your startup spends £75,000 building an app, and £45,000 of that spend qualifies as R&D.
Under the merged RDEC scheme, the gross credit on £45,000 is £9,000, and the net value after tax effects is usually lower than the gross figure. Under ERIS, if the company qualifies as R&D-intensive and loss-making, the return can be significantly stronger.
The exact outcome depends on profitability, tax position, and whether the company meets the ERIS conditions, but the key message is that a well-structured claim can offset a meaningful portion of the build cost.
HMRC Compliance: What You Need Now
Follow HMRC’s qualifying test to determine whether your software or app development project is eligible for R&D tax relief.
HMRC has tightened the claim process. Today, a strong claim usually needs:
- A clear technical narrative.
- Evidence of uncertainty.
- A breakdown of qualifying costs.
- An Additional Information Form.
- A properly prepared tax return claim.
This is why software claims often benefit from specialist support. A general accountant may know tax rules, but software R&D claims live or die on the quality of the technical story.
Common Reasons Claims Get Rejected
The most common problems are:
- Treating all software development as R&D.
- Failing to explain the technological uncertainty.
- Submitting weak or vague technical evidence.
- Missing required forms.
- Using a generic adviser who does not understand software engineering.
If you want the claim to survive HMRC scrutiny, it needs to read like an engineering narrative, not a marketing summary.
When to Start the Claim Process
The best time to think about R&D relief is during the build, not after year-end. If you wait too long, team members forget the technical blockers, sprint notes disappear, and the evidence becomes much harder to reconstruct.
A simple rule: if you think the app may qualify, start logging the hard technical work as it happens.
FAQ
Does building a mobile app qualify for R&D tax credits?
Sometimes. It qualifies only where the work resolves a genuine technological uncertainty and seeks an advance in science or technology.
What is the difference between the merged scheme and ERIS?
The merged scheme applies broadly from 1 April 2024. ERIS is the higher-value route for loss-making SMEs that are R&D-intensive and meet the 30% threshold.
Can I claim if I used an agency?
Yes, if your company contracted for the R&D and bore the risk under the merged-scheme rules.
How much can I claim on a £100,000 app build?
It depends on how much is qualifying R&D. On qualifying spend, the merged scheme usually gives a net benefit around 14.7% to 16.2%, while ERIS can be much higher for eligible loss-making SMEs.
Do AI features increase my claim?
Often yes, if they involve genuine technical uncertainty. Routine API-based AI use does not automatically qualify.
What if HMRC rejects my claim?
You can challenge or appeal, but the best defence is a strong technical narrative and good evidence before filing.
Can I claim if I am not profitable?
Yes. The merged scheme can still generate value, and ERIS can provide a cash benefit for eligible loss-making R&D-intensive SMEs.
Do I need to be R&D-intensive?
No. R&D-intensive status is only required for ERIS, not for all merged-scheme claims.
R&D Tax Credits for App Development –note for founders
R&D tax relief can make a real difference to app development budgets, but only if the work meets HMRC’s technical test and the claim is documented properly. For UK founders, the opportunity is strongest when the build involves genuine uncertainty, non-obvious engineering work, and clear evidence that the company carried the risk.
Get a free assessment of whether your app build qualifies for an R&D tax credit.
