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How UK PropTech startups can raise capital through R&D Tax Credits

Updated: May 18, 2023

What is Proptech?

Though the Proptech industry is an area of research and development (R&D) that’s perhaps less recognised than the giant Medtech and Fintech sectors, its value shouldn’t be underestimated.

Proptech is paving the way for the modern housing market, enabling outdated systems to step into the future by integrating sophisticated technology within property services.

With a £1.3 trillion mortgage market in the UK alone, there is huge opportunity for innovation to make life easier for homeowners. There’s also great demand for services that help improve the notoriously dysfunctional landlord/tenant relationship.

From the resident’s wellbeing to the construction of the home itself, the list is endless when it comes to ways in which Proptech can better society.

What is R&D, and what are R&D Tax Credits?

On the subject of bettering society, R&D is essentially defined as the creation of a product or service that contributes to making the world a better place, through innovative technology.

What you might not know is that the UK government rewards R&D innovators, such as Proptech founders, allowing them to reclaim up to 27% of capital spent on R&D by filing an R&D Tax Credit.*

There are two schemes that make up R&D Tax Credits.

The first (and more conventional) R&D Tax Credit Scheme is the SME Scheme. Its popularity stems from the fact that early-stage businesses are eligible. Applicants for the SME Scheme must meet the following criteria:

· less than 500 employees;

· less than €86M in gross assets;

· less than €100M in turnover.

Within the SME Scheme, a business’ financial position determines how much money they can claim back. Loss-making companies are entitled to claim up to 27% of total R&D eligible costs, which is paid directly, in cash, into your bank account.

Alternatively, profit-making companies can be awarded up to 21.5% of total R&D eligible costs, this time in the form of a tax credit.

Should your business exceed the metrics of the SME Scheme, you can still claim back R&D expenses, but you’ll have to proceed under the RDEC Scheme.

Successful RDEC R&D Tax Credits reclaim a fixed rate of 20% (subject to corporation tax). As RDEC applicants are high-growth companies dealing with large sums of money, this lower percentage still rewards huge financial benefit.

If you’re new to the world of R&D Tax Credits, figuring out your eligibility and the size of your potential claim might seem a little complex. Luckily, expert advisors at Claim Capital are here to help.

Filing an R&D Tax Credit with Claim Capital is a speedy, cost-efficient process that helps startups receive maximum financial benefit to then reinvest in the growth of their business.

Proptech startups can benefit from R&D Tax Credits

Many Proptech founders overlook their eligibility to gain game-changing capital through R&D Tax Credits.

There are multiple avenues of Proptech that are compatible with this incentive, including;

· Virtual reality technology to digitally simulate real estate viewings;

· Augmented reality to display interior design and architecture;

· Designing and innovating smart devices for the home;

· Developing new ecological slimmer insulation materials for houses;

· Developing an existing method to create an alternative with less waste;

HMRC reported that the total financial support claimed through R&D Tax Credit schemes for 2020 was estimated to have reached £7.4 billion, indicating a 19% increase from last year’s total.

Despite the huge pot of money on offer, Proptech remains one of the sectors with the lowest volume of R&D Tax Credit applications.

Proptech founders – your industry deserves more. It’s time to start claiming!

File your R&D Tax Credit with Claim Capital

Claim Capital is proud to be the dedicated partner to the UK Proptech Association (UKPA), and over the years we’ve gained experience in assessing and submitting R&D Tax Credit Claims specifically within the property market.

Unlike other R&D advisors that charge a hefty, percentage-based fee (10-30%!), Claim Capital operates an affordable Fixed Fee, that’s only payable upon success!

We want to see more R&D Tax Credits land in the pockets of Proptech founders. So for UKPA gold members, we offer a £500 discount off your first claim. With no upfront costs, and a 100% success rate, it’s worth speaking with our experts to find out what you could be owed.

The market-leading source for Proptech Data, Unissu, contacted us out of concern that they had previously been underclaiming. After reviewing their previous R&D Tax Credits, experts at Claim Capital uncovered a £32,000 shortfall that their accountants had missed.

To get the most out of your R&D Tax Credit claim, seek specialist advice from Claim Capital.

*These are the updated figures in line with the new legislation announced in the April 2023 Spring Budget.


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