What are R&D Tax Credits?
R&D tax relief is the government’s way of rewarding Limited farms that are investing in innovation by developing new, or improving existing products, processes, services, devices and materials or advancing the state of knowledge in their sector.
UK Limited farms and rural enterprises are able to claim tax relief for their R&D activity, the scheme was introduced by the Government in 2000 as an incentive to encourage businesses to innovate and is so doing improve their products, services and processes.
Businesses can claim back expenditure spent on projects where they can demonstrate how they are breaking into new ground and have overcome technical or scientific challenges.
Making and R&D Tax Claim
R&D tax relief can be claimed for up to two years from the end of your accounting period. This means that once your business enters a new tax year, you are no longer eligible to claim for any projects that took place more than two years ago.
Research carried out found that although around 800,000 businesses are likely to be eligible for R&D tax relief, just 8% are claiming it!
How R&D Tax Relief Works
In order to qualify for R&D tax relief, the business must account for Corporation Tax, the relief is eligible for both loss-making companies and those making a profit.
Crop Based Agriculture R&D
This can mean any type of crop, for example:
- Process: Optimising the growing conditions for fruits and vegetables
- Process: Improving the yield of fruits and vegetables
- Process/Formulation: Trialling the use of different fungicides and pesticides and in differing quantities to attempt to maintain or improve yield. Experimentation with novel formulae and concentrations
- Process: Organic vegetable growth – attempting to grow fruits and vegetables organically, but making novel interventions to increase yield.
Livestock Agriculture R&D
- Process: Improving quality of the product – meat, cheese, milk
- Formulation: Feed trials to improve eggs, meat, cheese, milk
- Formulation: Experimenting with different feeds to improve milk
- Formulation: Improving protein and fat content in milk
- Process: Improving egg quality
- Viscosity, colour, consistency, protein + freshness of the eggs
- Process: Improving muscle to fat ratio in animals
- Formulation: Phasing out soya content in feeds due to environmental impact
- Knowledge: advance in the field of statistical modelling
The average claim size as quoted by the HMRC in Sept 2019 for the year 2017-18 for Agricultural businesses was £42,857.
Essentially anything that helps you gain a competitive advantage in a new and innovative way could be eligible for tax relief. The tax laws around R&D tax relief are complicated, and the criteria for eligibility may seem ambiguous. In order to get the largest tax relief return, you need to have an expert on your side. Our R&D partners only do R&D and are one of the best in the business.
There’s no risk attached and the initial assessment will only take around thirty minutes of your time.