Tax Relief for Agriculture

Funding for Agricultural Businesses

There is a string of challenges facing today’s agricultural sector. The fact is the world’s population is growing at a much faster rate than the supply chain for food production. Arable land needs significant restoration before it can sustain crops at scale. Environmental pressures such as climate change, which creates warmer temperatures and drier soils, are affecting farming practices. The National Farmers Union has not been shy when it comes to expressing its concern about rising costs, labour shortages, bird flu, adverse weather affecting output, and post-Brexit changes. 

The impact of climate change on agriculture is drastic, reducing crop yields and lowering livestock productivity. However, the agricultural industry is not the innocent party, as farming practices contribute to climate change by way of greenhouse gases released into the atmosphere. The situation is that, despite greenhouse gas emissions from agriculture decreasing by 16% between 1990 and 2020, the sector still contributes 11% of all greenhouse gas emissions in the UK. There is good news, though, as according to the Agri-climate report 2022, 58% of farmers were taking actions to reduce emissions. Innovation within agriculture and food production can help minimise this and contribute to net zero goals. 

R&D in Agriculture

Innovation is frequent on farms—from adapting products to keep up with changes in climate to developing new techniques to extend the growing season. If a farmer has addressed a scientific or technological uncertainty whilst innovating and made an advance in the industry—even if the project was unsuccessful—they could be able to take advantage of HM Revenue & Customs’ (HMRC’s) research and development (R&D) tax credit incentives. 

Here are some examples of R&D in agriculture:

  • Genetically modifying plants and seeds to adapt to changes in weather/climate

  • Developing new techniques to draw heat into the ground, so plants can grow earlier and produce for longer (extending the growing season)

  • Redesigning the growing spaces, for example, greenhouses

  • Developing new planting methods to protect young crops from pests

  • Maximising yield by using smart sensors and Internet of Things (IoT) technology

  • Developing new fertilisers with purely natural ingredients

  • Developing digestion methods to create nutrients for vertical farming operations

  • Developing new cleaning processes when milking cattle

  • Adapting existing machinery, for example, incorporating agri-tech through autonomous robotics

  • Engineering projects for managing and reusing waste in food production

    How Can You Fund R&D in Agriculture?

    There are various forms of innovation funding available to enable agricultural R&D to take place, including grant funding and tax relief. Grants, usually nonrepayable, are awarded by funding bodies prior to any innovation taking place, whilst tax relief is a retrospective incentive claimable after the accounting period in which the R&D took place.  

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    Grant Funding

    Any business that’s investing time and resources into innovative R&D in the UK can apply for and access UK/EU grant funding. There are various funding bodies, such as Innovate UK and the European Innovation Council, which provide funding competitions for businesses to access funding to innovate and grow.
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    The Patent Box

    The Patent Box is a government tax relief scheme that rewards companies for investing in innovation. If a company is making a profit on patented inventions, it’s eligible for a lower effective corporation tax rate of 10% on relevant profits. What’s more, if a company is eligible for the Patent Box tax relief regime, it’s likely that it’s also eligible for R&D tax relief.
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    R&D Tax Relief

    HM Revenue and Customs’ (HMRC’s) R&D tax relief scheme rewards businesses that are seeking an advance within their industry. R&D tax credits can be claimed by businesses that are developing new systems, products, or processes or modifying existing ones, which in turn create a scientific or technological advancement.

    Your Innovation Funding Partner

    Ryan can support you in cultivating a brighter future for our planet through your ground-breaking agricultural innovation. Our team of innovation funding specialists will ensure you’re rewarded for your sustainable practices, resilient crops, and advanced technologies that will shape the future of food production. Our aim is to empower farmers with the tools they need to overcome challenges, increase yields, and improve livelihoods.

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