Does Your Farm Qualify for Research & Development Tax Relief?

With the Agriculture Bill making its way through parliament, the transition towards farmers being paid for ‘public goods’ is well underway. This will see subsidies move away from direct payments for the amount of land farmed and instead see a regime which rewards farmers for the work undertaken to enhance the environment and invest in sustainable food production. With known changes for farm subsidies around the corner, now is the time to make sure that your farm is fit for the future.

Whatever action a business takes, it’s worth considering whether you might qualify for research and development (R&D) tax relief. R&D tax relief is available when a project is undertaken to achieve an advance in science or technology by resolving some kind of uncertainty.

HMRC’s definition of what qualifies for R&D tax relief is quite broad and there are a number of activities that may qualify for R&D tax relief. If your business is incurring costs investigating one of the activities listed below, additional R&D tax relief may be available. The costs must be in relation to research for which the solution is not commonly available.

  • Increasing crop yields;
  • Machine alterations;
  • Drones;
  • Soil management;
  • Irrigation;
  • Improving labour productivity;
  • Chemical alternatives.

R&D tax relief is only available for companies and, for most farming businesses, will provide a 230% tax relief – i.e. for every £100 spent on qualifying R&D, a company can deduct £230 from its profits. In addition, it’s possible to look back over the past two tax years and make a retrospective claim for R&D tax relief.

If you have any questions or if you would like to discuss this with us in more detail, please contact Hannah Farmborough or call on 0207 429 4147 to be put in contact with a member of our Agriculture team.

This article originally appeared on the blog of our member firm, MHA Larking Gowen.