How can R&D relief help agricultural businesses?

Research and Development (R&D) tax relief has attracted a lot of media interest in recent years – much of it due to the abuse of the scheme. This has distracted from how valuable it is, including in agriculture, where the huge potential for R&D is often overlooked. 

There are many problems and challenges facing UK agriculture, but the good news is that the work to resolve some of these can often qualify for R&D tax relief. This is true across a wide range of issues.  

• Labour shortages: The agricultural sector faces a persistent shortage of workers, particularly in seasonal and specialised roles. This has been exacerbated by Brexit and the difficulties with attracting and funding domestic workers to the industry. Improving labour productivity through robotics, machinery and innovative methods has potential to attract R&D relief   
• Climate change: Climate change, including associated extreme weather events such as droughts, floods and heatwaves that affect crop yields and livestock management, impacts agricultural productivity. Solutions for combating climate change, proofing against environmental threats and enhancing resilience against disease can attract relief, provided they involve technology or science   
• Rising input costs: The cost of essential farm inputs like fuel, fertiliser, pesticides and equipment has increased, impacting farm profitability. Cost-saving methods removing the requirement for traditional fuels, pesticides and chemicals or developing alternative pesticides, fertilisers etc can attract relief 
• Environmental sustainability: The UK faces challenges in balancing agricultural production with environmental objectives. Developing methods to meet goals to reduce emissions while increasing or even maintaining production can qualify for the relief 
• Quality and animal welfare: This is not a new challenge, but one about which there is increasing awareness and visibility. Experimentation with animal nutrition and feeding strategies to improve animal welfare, breeding ability or product quality is another potential qualifying area  
• Soil Degradation: Unsustainable agricultural practices, including monoculture and chemical use, have led to soil degradation, affecting crop production and environmental sustainability. Finding better methods of soil management, improving soil health and mitigating water pollution can qualify 

Moreover, developing or contributing to studies involving the development of biotechnology and agricultural technology (agritech) is at the forefront of agricultural development. Precision agriculture that uses tools such as GPS, drones and data analytics to optimise resource use and maximise crop production efficiency is another key area of R&D within the industry.   

Agricultural R&D often involves collaboration between universities and research institutions.  These collaborations can facilitate knowledge exchange and accelerate the development of new technologies and practices. Provided you are a trading company, your level of contribution can qualify for the relief. 

In 2024, the two R&D schemes, SME and RDEC, were replaced by a simplified merged R&D scheme. This means that trading companies subject to corporation tax undertaking qualifying research and development can claim a taxable expenditure credit of 20% of their qualifying expenditure, subject to some conditions.   

For loss-making SME companies, there may be the option to claim relief under the enhanced R&D intensive support scheme (ERIS). This allows an additional deduction to profits of 86% of qualifying R&D expenditure and a claimable R&D tax credit of 14.5% of their surrenderable loss (similar to the old SME scheme).  

We have a large team of R&D tax specialists (including an ex-R&D Inspector) who can submit claims and applications for you. We navigate the rules in relation to the work you undertake to ensure you receive the correct and maximum allowable amount of relief.  

We will get to know your business and spot qualifying R&D areas that you may not have considered and ensure that all qualifying R&D is included. After this, we gather technical and financial information to bring together the HMRC submission.  

Please get in touch with your usual contact or any of the contacts listed if you would like to discuss this further. 

Approval code: NTEH7032611