Many farmers and companies filtering into the agriculture sector engage in activities which could potentially qualify for research and development tax relief without realising. Taking the time to sit back and assess the activities undertaken can deliver a crucial cash flow benefit and enable the company to excell further in its core activities.
R&D Tax – Farming and Agriculture
The Agricultural sector contains an abundance of activity qualifying for R&D tax relief because of the ‘can do’ attitude of its business leaders, the hands-on business owner. While financial margins are becoming smaller, Farmers strive to enhance the efficiency of their production process. It is these activities which often qualify for R&D Tax Farming.
One key point to acknowledge is that R&D tax relief is only available to limited companies. Many farming businesses are run as partnerships and so cannot qualify, but this does not mean the end. This is a further planning point to bring to the attention of innovative farmers, wishing to make the most of this generous government incentive (e.g. incorporation may be worth considering).
Types of Qualifying Projects
Qualifying for R&D tax relief spans the full sector, including development of, for example:
- Pest control
- Adaption of atmospheric conditions – e.g. optimization of silage wrap or chicken coops
- Development of new machinery and components or adaption of existing
- Methodologies to maximise yield
- Processes to reduce waste and/or reuse waste products – e.g. biofuels
- Health products to assist livestock production and reproduction – e.g feed supliments
R&D Tax Farming, The Benefit
Taking the time to see the innovation in your daily activities, seeing these as projects not chores, on average results in a 25% cash saving on the projects.
Only certain costs and projects qualify. Taking time to ensure your projects and finances are set up correctly is key. Allowable costs include:
- Staff, paid via your payroll.
- Materials, probably used up in the trials, prototyping and testing.
- Subcontractors, maybe there is the need to bringing in specalists to undertake part of your project.
Once the accounts are ready to submit to HMRC, the company can formally make its claim for R&D Tax Relief. If your company is eligible to receive R&D Tax Incentive Agriculture, a cash amount can be obtained. Most noteworthy, the company will receive a reduction in its corporation tax bill, a corporation tax refund or cash for the surrender of losses.
To find out more contact the team at R&D Tax Solutions.
The team at R&D Tax Solutions have provided a reliable and efficient service over a number of years. Their work has allowed us to focus on commercial activities and removed the administrative burden of making a claim. We would highly recommend R&D Tax Solutions.