If you run a one-person software company in the UK, you have probably heard about R&D tax credits. You may have assumed they are only for big teams with dedicated project managers and formal R&D departments. That is a common misunderstanding, and it costs solo developers real money.
HMRC's definition of R&D is broader than most people think. It does not require a lab coat, a team of PhDs, or a separate R&D budget. It requires a project that sought to advance science or technology by resolving scientific or technological uncertainty. If you are a solo developer building new software, integrating APIs in novel ways, or solving technical problems where the solution was not obvious at the start, you are almost certainly doing qualifying R&D.
This article covers R&D tax credits explained specifically for the one-person software company. We will look at what counts, how to prove your time without a project manager, and how to avoid the common mistakes that get solo developer claims rejected.
What Qualifies as R&D for a Solo Software Developer
HMRC uses a specific test. The project must seek to achieve an advance in science or technology. That advance must be in your field, not just for your business. And it must have involved resolving scientific or technological uncertainty that a competent professional in your field could not resolve by applying standard practice.
For a solo software developer, this often means projects where:
- You built something that had not been done before in your specific context.
- You integrated systems in a way that required custom development because no off-the-shelf solution existed.
- You had to overcome technical limitations in existing platforms, APIs, or frameworks.
- You designed new algorithms, data processing methods, or system architectures to solve a problem that had no clear solution.
- You adapted emerging technologies (AI, machine learning, blockchain, edge computing) to a practical application where the path was not obvious.
Routine software development does not qualify. If you are building a standard WordPress site, customising a Shopify theme, or writing straightforward CRUD applications using established frameworks, that is not R&D. The dividing line is technical uncertainty. If you knew how to do it before you started, it is not R&D.
Why Competitors Miss the Mark on Solo Developer Claims
Most online guides and accountancy firms focus on larger teams. They talk about project managers logging time, formal R&D registers, and structured testing phases. That advice is useless to a solo developer who is the project manager, the developer, the tester, and the person doing the admin.
The reality for a solo developer is that your R&D activity is mixed in with your day-to-day work. You might spend three weeks building a standard feature for a client, then hit a technical wall and spend two weeks researching and prototyping a novel solution. The R&D part is those two weeks, but you did not stop your clock and start a separate R&D project. You just worked through the problem.
HMRC understands this. The legislation does not require formal project management structures. It requires evidence that qualifying R&D took place. The challenge for a solo developer is capturing that evidence without a team to help you.
How to Prove Qualifying Activity Without a Project Manager
You need to demonstrate three things for each R&D project:
- What the technical uncertainty was.
- Why a competent professional could not resolve it by applying standard practice.
- What work you did to resolve it.
Without a project manager, the burden falls on you to document this as you go. Here is how to do it practically.
Keep a Technical Diary
This is the single most important thing you can do. Open a document, a notebook, or a note-taking app. Each time you hit a technical problem that is not straightforward, write down:
- The date.
- The specific technical problem.
- What you tried that did not work.
- What you researched (specific articles, documentation, forums).
- What you built or tested.
- The outcome.
This does not need to be formal. A few lines per entry is fine. The key is consistency. If you do this as you work, you have a contemporaneous record that HMRC will accept. If you try to reconstruct it six months later from memory, you will miss details and weaken your claim.
Use Version Control History
Your Git commit history is powerful evidence. It shows the sequence of work, the branches you created, the experiments you ran, and the dead ends you hit. HMRC will not ask for your commit log directly, but your accountant can use it to build a narrative of the R&D process.
Write meaningful commit messages. Instead of "fixed bug", write "experimented with three approaches to resolve memory leak in real-time data pipeline. Attempted garbage collection tuning, then switched to streaming buffer architecture." That single commit message documents technical uncertainty and the work you did to resolve it.
Save Your Research Sources
When you read documentation, forum posts, academic papers, or API references to solve a problem, save the links or take notes. HMRC wants to see that you could not find a ready-made solution. Your research trail proves that.
Bookmark folders, a reference document, or a simple spreadsheet works. The point is to show that you did not just copy a Stack Overflow answer. You investigated, evaluated, and adapted.
What Costs Can a Solo Developer Claim
For a one-person software company, the main qualifying costs are:
- Staff costs: Your own salary and employer pension contributions, apportioned to the time you spent on R&D activities.
- Subcontractor costs: If you paid another developer or specialist to help with the R&D work, that can qualify, but the rules are tighter. HMRC limits qualifying subcontractor costs to 65% of the payment for SMEs.
- Software licenses: If you bought specific software licenses directly for the R&D project (e.g., a specialised API subscription, a cloud computing service you used only for testing the new approach), those costs can qualify.
- Consumables: Items used up in the R&D process. For software, this is typically cloud computing costs, API usage fees, and data costs directly attributable to the R&D work.
You cannot claim your own dividend payments, general overheads, or costs that are not directly attributable to the R&D project.
The Solo Developer's R&D Claim: A Worked Example
Let us look at a realistic scenario. You are a solo developer in Manchester running a limited company. You build custom software for logistics companies. In 2024/25, you took a salary of £12,570 and dividends of £40,000. Your company's total turnover was £95,000.
During the year, you spent 30% of your time on a project building a real-time route optimisation tool for a client. The technical challenge was integrating live traffic data from three different APIs, each with different latency and data formats, and building an algorithm that could re-route vehicles in under 30 seconds. No off-the-shelf solution existed that met the client's requirements. You spent eight weeks researching, prototyping, and testing before you found a workable approach.
Your qualifying R&D costs would be:
- Staff costs: 30% of £12,570 salary = £3,771. Employer NI on that portion (approximately £520 at 13.8%) also qualifies. Total staff cost: roughly £4,291.
- Software licenses: You bought a £200 per month API subscription for the traffic data during the development phase. Three months of testing = £600.
- Consumables: Cloud computing costs for running your test simulations. You spent £150 on additional compute capacity during the R&D phase.
Total qualifying expenditure: approximately £5,041.
Under the merged R&D scheme for accounting periods starting on or after 1 April 2024, your company would receive a tax credit worth up to 15% of the qualifying spend if you are loss-making. If your company is profitable, you would reduce your corporation tax liability by up to 25% of the qualifying spend (depending on your profit level and the marginal relief position).
In this example, a £5,041 qualifying spend could reduce your corporation tax bill by roughly £1,260 or generate a cash credit of around £756 if you are loss-making. That is real money from work you already did.
Common Mistakes Solo Developers Make on R&D Claims
I have seen the same errors repeatedly when reviewing solo developer claims. Avoid these.
Claiming Routine Development as R&D
Building a standard ecommerce site, even a complex one, is not R&D. Neither is customising an existing framework unless you are pushing it beyond its documented capabilities. If a competent developer with the same tools could have done it, it is not R&D. Be honest about the dividing line.
Not Apportioning Time Accurately
Some solo developers claim 100% of their salary as R&D because they believe everything they do is innovative. That is a red flag for HMRC. Most solo developers spend a significant portion of their time on non-qualifying work: client communication, admin, accounting, routine maintenance, bug fixes. Apportion your time realistically. A reasonable estimate based on your technical diary is much stronger than a blanket 100% claim.
No Contemporaneous Evidence
HMRC can and does open enquiries into R&D claims. If you cannot produce evidence that you actually did the work, your claim will be rejected and you may face penalties. The technical diary, commit history, and research notes are your evidence. If you do not have them, do not submit the claim until you have built the documentation habit for the next project.
Ignoring the Subsidised Nature of Client-Funded Work
If a client paid you to do the R&D work, HMRC considers that a subsidy. The rules changed in 2024. For accounting periods starting on or after 1 April 2024, if your R&D project is subsidised (including by a client), you must claim under the RDEC scheme, not the SME scheme. This is a complex area. If a client funded the project, speak to an ICAEW-qualified accountant before you submit the claim.
How to Prepare Your Solo R&D Claim
The process for a solo developer is simpler than for a large company, but it still requires structured preparation.
- Identify your qualifying projects. Go through your year and identify the projects or parts of projects where you resolved technical uncertainty.
- Gather your evidence. Collect your technical diary, commit logs, research notes, and receipts for software and cloud costs.
- Calculate your qualifying costs. Apportion your salary, pension, and overheads to the R&D time. Add software and consumable costs.
- Complete the R&D section of your CT600. Your corporation tax return includes a supplementary page for R&D claims. Your accountant will handle this.
- Prepare a technical report. A narrative of each project, the technical uncertainty, the work done, and the outcome. This is the document HMRC will review if they open an enquiry.
At Holloway Davies, we handle R&D claims for solo developers and small tech companies across the UK. Our R&D tax credits service is designed for businesses that do not have internal finance teams. We help you build the evidence, calculate the costs, and submit a compliant claim.
When to Speak to an Accountant
If your company has turnover under £100,000 and you are a solo developer, the R&D claim is usually straightforward. But the rules changed in April 2024, and the merged scheme has different rates and restrictions. If your project was funded by a client, if you used subcontractors, or if your company is loss-making, the calculations become more complex.
Speak to an accountant who understands software R&D. A generic high street accountant may not know how to apportion a solo developer's time or how to document technical uncertainty without a project manager. Our team at Holloway Davies works with solo developers in Manchester, London, Bristol, and across the UK. We know the questions HMRC will ask, and we prepare your claim to withstand scrutiny.
R&D tax credits are not just for big companies with whiteboards and project managers. They are for anyone who pushed the boundaries of what was technically possible. If that sounds like your year, you should be claiming.