Blockchain and crypto firms can claim R&D tax
Blockchain technology has revolutionised the way data is controlled, providing unparalleled transparency and security. Through the decentralisation of platforms, intermediaries can be removed from transactions, providing a wide scope of benefits particularly within the financial services sector.
Decentralised applications, or DApps, have the potential to remap the technological landscape, while DeFi could provide a viable alternative to almost every financial service consumer to utilise today. Cryptocurrencies, such as Ether or Bitcoin, are examples of this. By utilising distributed ledger technology, they remove the need for a central bank or administrator and allow payments to be made without intermediaries.
Businesses are increasingly recognising the benefits that these cutting-edge technologies can provide and are investing heavily in the development of blockchain-based solutions. These developments usually involve highly skilled software developers, cryptographers and mathematicians, and often qualify for R&D tax relief.
SMEs claiming R&D tax relief can gain a lucrative cash credit of up to 33p for every £1 spent on development, and typically projects involving the following will contain qualifying activities:
- Development of new software platforms that utilise blockchain-based technologies to provide enhanced capabilities
- Development of new DApps, or the appreciable improvement of existing DApps to improve stability, speed, functionality or security
- Re-engineering of existing software to make use of and integrate with cutting-edge blockchain solutions
- Development of custom blockchains and new protocols that represent a step beyond the existing state-of-the-art.
Moore Kingston Smith has a specialist team for R&D tax relief, R&D expenditure credit and other innovation incentives. Through our long-standing representation on HMRC’s R&D Consultative Committee, we have played a leading role over the years in the development and interpretation of the R&D tax relief schemes.
Our expert team of scientists, engineers and tax advisers have significant experience working with financial services and fintech businesses, giving us in-depth knowledge of the technological challenges you will have faced.
For more information about R&D tax relief within the financial services sector, please contact Tom Moore, Head of Financial Services, or Thomas Hayden, Senior R&D Manager.