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R&D Tax Credits for Agriculture and Farming

Businesses operating in the agricultural sector can be eligible for tax relief on the R&D work they undertake, which is often vital if they are to thrive.

Innovation can be sustained with the help of tax relief on farm machinery used for research and development in the quest to find better solutions that make processes more efficient or environmentally friendly.

Companies may not necessarily be aware they qualify for agriculture R&D tax credits or which system they can use to apply. This guide explains what you need to know and how randd can help with your farming R&D tax claim.

What activities qualify for agriculture R&D tax credits?

Examples of the activities that can be eligible are:

  • Reducing energy use and becoming more environmentally friendly
  • Developing new types of crop varieties/breeds
  • Optimising crops to improve quality and resistance to environmental threats
  • Improving machinery and harvesting processes to retain high-quality produce
  • Introducing bespoke software/hardware to automate or streamline operations
  • Diversifying into untried areas such as packaging, alternative produce etc.

Benefits of a farming R&D tax claim

Pushing forward technology to improve farming processes is something that can benefit everyone, especially the owners of agricultural businesses.

Consumers can benefit from higher-quality and healthier products while farmers can improve yields and increase their profits. The money spent on research and development in order to facilitate this innovation can be offset by an agriculture R&D tax claim.

What expenses can be claimed as agricultural tax relief?

Staff costs:
Specifically, people directly involved in defined, technical roles within the project whose expertise is part of the R&D process. Also, indirect staff working in management, procurement and function control who help enable the R&D to happen.

Subcontractor costs:
If you lack appropriate in-house expertise and need to hire a third party to help with the R&D project, the subcontractor expenditure can be included in a claim.

Externally provided workers:
These are workers who are not directly employed by your company but have been brought in to fulfil a specific role related to the R&D project, serving under your care, custody and control.

Consumable materials:
Any items that are used purely in the R&D process and have no further use once the project has been completed.

Utility costs:
A proportion of heat, light, power and water costs directly related to the R&D project can be included in a claim.

How much tax relief could you claim?

This depends on the size of your business and the extent of the R&D work undertaken.

But at randd, we are proud to have successfully claimed back over £100,000 for a claim covering two years for a potato farm which developed, packaged and distributed new varieties of potato.

That figure is commensurate with our average claim value of £50,000, while HMRC have revealed the amount being recouped in farming R&D tax credits is increasing yearly.

Edward Lindley, the managing director of the potato farm, said: “R&D tax credits have changed my perception of the job. It’s going to give us strength – I’m very pleased with it.”


How we have helped to maximise agriculture R&D tax credits

In addition to the example above, a poultry farm, driven by its aim to achieve technological advances by investing time into research and development, received over £30,000 for a single year in agriculture R&D tax credits.

A niche but diversely minded company, the farm worked hard to navigate challenging projects and break through the status quo of their industry.

In addition to their R&D projects, the company’s owners have also taken the initiative to grow their facilities so they have more capacity for production and processing.

Various trials have been conducted to enhance the welfare of the birds at the farm in ways that are sustainable and environmentally friendly.

Support in claiming agriculture R&D tax credits

If you have any questions relating to R&D tax credits for farmers and the agriculture industry or require advice about how to proceed with a claim, call randd on 01332 409 711 and we will be happy to assist you.

We have a proven track record of claiming back thousands of pounds in tax for clients in the agricultural sector.