Is farming eligible for R&D tax relief?

By Heather Bright, Partner and ARA specialist

Yes – as long as you meet certain criteria!

R&D tax relief is designed to incentivise innovative products, methods and projects wherever they are required, by reducing the Corporation Tax burden on those businesses carrying out R&D.

Among some sectors, however, there is an assumption that R&D is purely laboratory-based, with life sciences, heavy industry and the cutting edge of gene therapies taking the lead – and therefore only these sectors can claim R&D tax relief.

While these sectors are a dominant force in the R&D space, any project which makes a scientific or technological development and addresses a challenge within its industry is likely to qualify for R&D tax relief.

R&D tax relief and defining R&D

Defining R&D in the context of the tax relief has historically been difficult, now compounded by HM Revenue & Customs (HMRC) cracking down on non-compliance.

This has made many business owners nervous about claiming the relief, but you could be missing out on valuable support for your innovative project.

To qualify for R&D tax relief, your project must:

  • Make an advance in science of technology
  • Overcome an uncertainty or challenge
  • Not be easily worked out by someone else in your field
  • Research or develop a new process, product or service, or improve upon an existing one

You must be able to identify how your project meets these criteria and provide details in the Additional Information Form (AIF).

How does farming and agriculture come under this definition?

Agriculture and farming has become a major site of commercial R&D in recent years as the sector looks for more sustainable ways of supplying a growing population with affordable food and other products from animals or crops.

You might be working on, or have already worked on:

  • Developing new farming equipment
  • Applying AI to farm operations
  • Modifying or combining crop items
  • Creating new applications for drones and autonomous vehicles

Despite this, many businesses within the sector, particularly independent operators, assume that they are not eligible.

Developments that arise from R&D aren’t made in isolation. They typically arise from a commercial need, which means a lot of R&D is happening within agriculture and farming that is not being included in tax relief claims.

Contact our agriculture specialists today to find out how you can claim R&D tax relief on your most innovative projects.