Research and Development tax relief for farming companies


Farming and associated agricultural businesses are continually developing innovative processes to improve quality, output and efficiency.


Much of this innovation has been tried and tested in the field rather than the laboratory; by farmers rather than scientists. How many times have you looked at doing things in a different way or at a different time to overcome particular difficulties?

Many farmers are carrying out innovative work, moving the industry forward in what may seem like small ways but missing out on generous tax allowances for research and development introduced to encourage and reward such efforts.

Climate change and protecting precious resources are also driving advances in innovation. 

Does your company carry out any work in improving quality, efficiency or output in any of the following areas? With increased regulation perhaps you are looking at alternatives to existing chemical-based solutions? Does your farm have a particular challenge that you need to overcome?

  • Crop productivity or disease resistance
  • Soil quality
  • Food production
  • Pest control
  • Animal husbandry
  • Carbon footprint reduction
  • Water conservation
  • Biodiversity

Where projects qualify, a small or medium-sized company can claim an additional 130% research and development (‘R&D’) tax relief on all qualifying expenditure – so qualifying costs of £50,000 would attract additional deduction of £65,000 (with a corporation tax rate of 19% this is an additional £12,350 reduction in that company’s tax bill). Qualifying costs will typically include employee costs, materials and utilities relevant to the project.

Not all projects will qualify for the R&D relief – only those that seek (not necessarily successfully) to make an advance or overcome a technological uncertainty that would not be easily resolved by a typical, competent farmer. It is, however, surprising how many projects could qualify.

Changes from April 2023

The additional deduction for R&D expenditure will reduce from 130% to 86% and the payable tax credit will reduce from 14.5% to 10%.

As a result, loss-making SMEs will be eligible to claim a receivable tax credit of £18,600 for every £100,000 of qualifying R&D spending (down from £33,350 previously). Profitable SMEs subject to the new 25% corporation tax rate will receive a tax benefit of up to £21,500 per £100,000 of spending, whereas businesses subject to the 19% corporation tax rate £16,340 (down from £24,700 previously).

We can help you to evaluate the merits of a claim and, if appropriate, quantify the costs and prepare the submission to HMRC.

If you would like to discuss further

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