Is your business in the Agriculture sector?

If your business is in the Agriculture, Forestry and Fishing category you could be missing out on an average average R&D tax credit claim worth £45,455 (according to an official government report). The overall average claim for SMEs is £61,514.

Businesses in the Agriculture, Forestry and Fishing sector are missing out on thousands of pounds worth of R&D tax relief that they could be investing in future projects.

As a whole, the sector only claims £5m; that’s 0.4% of the total amount claimed. This is completely unsurprising as these businesses only account for 0.51% of the total number of R&D claims submitted.

For comparison:

  • Information and Communication: £65,199 average claim, 27.73% total claims submitted, £385m combined total amount
  • Manufacturing: £48,823 average claim, 26% total claims submitted, £280m combined total amount
  • Professional, Scientific & Technical: £70,010 average claim, 19.41% total claims submitted, £320 combined total amount

Not all bad news…

As reported in ‘Farming UK’, “The analysis indicates a positive trend for agricultural firms with an increase of 29 per cent in the number of claims since 2015, compared to the average for all sectors of 25 per cent.”

So, we’re moving in the right direction, but it is clear that there agriculture businesses are definitely not currently benefiting from the R&D tax credits they are entitled to.

Why aren’t people claiming R&D tax credits?

Broadly speaking, we have found three main reasons why businesses in the Agriculture, Forestry and Fishing sector are not claiming their R&D tax credits:

  1. They don’t know it exists

This is a major problem with the R&D tax credit and RDEC schemes across most industry sectors. Businesses, especially SMEs, simply don’t know that they exist. This has been recognised by HMRC, who plan to do more to publicise the schemes.

  1. Assumption that it only applies to tech and science industry companies

Due to wording like “scientific innovation”, many businesses glance at the R&D tax relief schemes and immediately discount themselves because they are not laboratory or tech based. But the schemes apply to all industries; it is simply a question of identifying where your innovations are meeting the R&D tax credit criteria. Which leads us nicely onto number three…

  1. Complicated application process

It is not a straightforward application process for R&D tax credits. The main stumbling blocks for most businesses are identifying exactly which of your projects are classed as R&D for tax relief purposes and figuring out which costs within those projects are eligible. Even non specialist accountants always take on an R&D claim submission for their clients.

Getting an expert involved is the quickest way to get all your questions answered and the best way to maximise your R&D claim. We don’t take over your accounts, we work with your existing people using our specialist knowledge to solely tackle your R&D tax credit application.

What types of things count as R&D in the agriculture, forestry and fishing sector?

Agritech is a good example of the sort of work that entitles you to R&D tax credits.  Agritech is the use of technology to improve production efficiency, increase yield and, ultimately, drive profits across the fields of aquaculture, horticulture and agriculture. Its focus is on the development of technology, rather than increasing land usage, to meet growing productivity demands.

You may be developing innovations in a service, product or application that qualify for R&D tax credits.

These include things like:

  • Vertical farming
  • Use of drones
  • Robotics mechanising a particular task
  • Sensor technology
  • Underwater remotely operated vehicles (ROVs)
  • Satellite technology
  • Artificial Intelligence
  • Biotechnology
  • Internet of Things
  • Big data
  • Smart irrigation
  • Soil management

If you are innovating the solution to an existing problem, you are probably entitled to R&D Tax Credits.

The UK’s international reputation as leaders in the field of agricultural innovation is growing and supports the government’s commitment to R&D tax relief.

In a recent Guardian article called ‘The government has promised more R&D. Where will the money come from?’ Graeme Reid states: “Exceptionally strong research in UK universities acts as a magnet to corporate R&D investors both from the UK and other parts of the world. Around half of the business R&D in this country is done by firms headquartered overseas, a significantly higher proportion than other major economies. Syngenta, headquartered in Switzerland, told the House of Lords Science and Technology Committee recently: ‘We currently have over 500 active collaborative R&D projects, and more of these are with partners based in the UK than any other country in the world. This suggests that UK is a great place – maybe even the best place – in which to participate in collaborative research in agricultural technology.’”

Great news overall for the future of this sector of the economy and plenty of scope for you to claim the R&D tax credits you are entitled to.


Jamie Smith