Agricultural R&D Tax Credits for UK Farms

Most UK farms are doing more qualifying R&D than they realise – but very little is being claimed under HMRC’s R&D rules.

Agricultural businesses are investing in new systems, genetics, precision technologies and sustainable practices. Yet agriculture remains one of the least represented sectors in R&D tax claims, mainly because:

• Most R&D advisers don’t properly understand farming
• Most farmers don’t recognise their innovation as “R&D” in the HMRC sense

With post‑Brexit policy changes, ELMS and the move away from BPS, UK agriculture is being pushed into a new era of innovation. If you’re developing new ways of farming, processing or managing land, there’s a real chance you’re doing qualifying R&D.

What Does Not Qualify as R&D

These activities, while skilled and often costly, do not meet the statutory R&D definition on their own:

• Standard farming operations – ploughing, drilling, spraying, harvesting, livestock husbandry and routine crop management using established methods and off‑the‑shelf equipment
• Routine use of precision agriculture – running GPS‑guided tractors, drones or variable‑rate kit using manufacturer settings and standard protocols
• Standard crop trials – testing commercial seed, fertiliser or crop protection products in line with supplier recommendations where results are broadly predictable
• Adopting known best practice – implementing organic, regenerative or IPM systems that are already well‑documented in public guidance and technical literature
• Standard veterinary and husbandry work – routine health plans, established AI protocols, and nutrition based on published feeding tables
• Commercial deployment of established technology – installing solar, wind, AD or other proven technologies to standard engineering designs
• Regulatory compliance – environmental monitoring, waste management and statutory reporting using known methods

Per CIRD81900, the same test applies in agriculture as in any other sector: there must be an attempt to achieve an advance in science or technology by resolving a scientific or technological uncertainty that a competent professional in the relevant field could not readily resolve from existing knowledge.

The core question is:

Did you face a problem that existing agricultural science and technology couldn’t solve?

What Does Qualify as Agricultural R&D

R&D arises where farmers, agronomists, scientists and engineers tackle problems that cannot be solved using standard methods or published knowledge.

1. Precision Farming Systems

R&D may arise where you are developing or integrating precision systems that go beyond standard commercially available solutions:

• Custom sensor arrays or data‑fusion approaches where off‑the‑shelf sensors don’t give reliable results in your conditions
• Bespoke variable‑rate systems where the interaction between application rates, soil variability and crop response is genuinely uncertain
• Autonomous or semi‑autonomous machinery where navigation and operation in variable terrain, crops or weather is unresolved
• Predictive models using farm‑specific data where yield, disease or pest predictions involve genuine scientific uncertainty

The line: simply buying and operating commercial precision ag equipment is not R&D. The uncertainty must arise from your specific integration or development challenge, not from learning to use a product.

2. Crop Science and Agronomy

Genuine R&D in crop management involves resolving uncertainties that published agronomic knowledge cannot answer:

• Novel intercropping, companion planting or rotation systems where species, soil biology and microclimate interactions are uncertain
• New soil‑health approaches – cover crop mixes, biochar, microbial inoculants – where impacts on your soil types and crops are unknown
• Integrated pest and disease strategies using biological controls, cultural methods or reduced chemistry where efficacy in your conditions is uncertain
• Crop adaptation to climate change – drought, flood or heat‑stress management where responses are not established in the literature

The line: following published protocols, trialling commercial varieties under standard conditions, or adopting known organic or regenerative systems is not R&D.

3. Livestock Innovation

R&D in livestock arises where conventional veterinary and husbandry knowledge doesn’t have the answer:

• Novel breeding strategies – genomic selection, crossbreeding or marker‑assisted selection with uncertain genetic outcomes and trait interactions
• New feed formulations or nutrition strategies where effects on performance, health or emissions (e.g. methane) are uncertain
• Livestock monitoring and health‑detection systems where sensor accuracy and reliability in real farm conditions is unproven
• Housing or handling systems designed to solve welfare, productivity or environmental challenges where engineering or behavioural science is uncertain

The line: routine breeding using standard EBVs, following published nutrition tables, or installing commercial monitoring systems is not R&D.

4. Controlled Environment Agriculture

Vertical farming, glasshouse and indoor systems frequently generate genuine R&D:

• LED light recipes for specific varieties where spectrum, intensity, photoperiod and plant response interactions are uncertain
• Novel nutrient delivery systems – aeroponics, aquaponics, closed‑loop hydroponics – where nutrient availability, pH and microbial balance are hard to control
• Environmental control algorithms where temperature, humidity, CO₂ and airflow effects on quality and yield are not predictable
• Scaling from small‑batch to commercial production where maintaining consistency at scale poses unresolved engineering and biological challenges

The line: operating a standard commercial glasshouse or vertical farm using established protocols and off‑the‑shelf systems is not R&D.

5. Post‑Harvest and Processing

R&D often arises in post‑harvest handling and primary processing:

• Novel storage or preservation – modified atmosphere, bio‑coatings, cold‑chain innovations – where shelf‑life or quality outcomes are uncertain
• New processing methods where impacts on nutrition, texture, flavour or safety are scientifically uncertain
• Waste‑to‑value systems for residues, by‑products or food waste where conversion processes involve genuine technological uncertainty

The line: using established cold storage, standard packaging or conventional processing methods is not R&D.

Agricultural R&D Tax Relief – Key Takeaways for Farmers and AgriTech Businesses

6. Water and Environmental Management

You may have qualifying R&D where there is genuine scientific or technological uncertainty, for example:

• Precision irrigation where interactions between soil moisture, crop demand, weather variability and system design are not well understood on a technical level.
• Wetland, buffer zone or natural flood‑management systems where hydrological performance on your specific land type is unknown and requires experimental design and monitoring.
• Carbon sequestration approaches (soil carbon, biochar, agroforestry) where carbon capture rates, measurement methods and long‑term stability are uncertain.
• Nutrient‑management systems to reduce run‑off and emissions where the interaction of practice, soil type and water chemistry is not well characterised.

Not R&D: Installing standard irrigation, following known drainage designs, or implementing established stewardship measures using routine methods.

7. Agricultural Technology and Automation

AgriTech development often involves qualifying R&D where technical uncertainties exist, such as:

• Robotic systems for harvesting, weeding, planting or livestock work that must operate reliably in variable, unstructured outdoor environments.
• Farm management software / decision‑support tools where algorithms, models or data‑processing approaches go beyond standard practice.
• Novel sensing technologies (hyperspectral, LIDAR, soil sensors) where accuracy, calibration and reliability in real field conditions are unproven.
• IoT and connectivity solutions for remote farms where power, range, latency and data‑integrity challenges in rural settings are unresolved.

Not R&D: Simply integrating off‑the‑shelf AgriTech products using standard configurations and APIs.

The Merged R&D Scheme (From 1 April 2024)

All agricultural companies now claim under a single merged scheme:

• 20% R&D Expenditure Credit (RDEC) on qualifying R&D costs.
• Net benefit ~15% of qualifying spend (assuming a 25% corporation tax rate).
• R&D‑intensive SMEs (where 30%+ of total spend is on R&D) may qualify for ERIS – Enhanced R&D Intensive Support, giving up to 27% benefit for loss‑making companies.

For farms and agri‑businesses on tight margins, this can provide valuable extra cash for reinvestment in technology, infrastructure and people.

Costs You Can Claim

You can include the R&D proportion of the following costs:

• Staff costs – salaries, employer NIC and pension for employees directly engaged in R&D (including supervisors and certain support staff proportionally).
• Subcontractor costs – 65% of payments to subcontractors carrying out qualifying R&D activities.
• Consumables – materials, seed, feed, chemicals, fuel and utilities that are used up in the R&D process.
• Software licences – specialist software used directly in R&D (e.g. modelling, data analysis, control systems).
• Cloud computing and data – from 1 April 2023, cloud services and data licences used in R&D can qualify.

If a trial or activity serves both production and R&D, you must sensibly apportion costs between routine operations and experimental work.

What HMRC Expects to See

To support an agricultural R&D claim, HMRC expects clear evidence of:

1. Baseline

The existing state of knowledge or technology in the relevant agricultural, veterinary or engineering field.

1. Uncertainty

A specific scientific or technological question that a competent professional could not readily answer at the outset.

1. Systematic work

A structured programme of work to investigate and attempt to resolve that uncertainty (e.g. trials, prototypes, measurements, iterations).

1. Outcome

What you learned – whether the uncertainty was resolved, partially resolved, or remained unresolved, and why.

HMRC will scrutinise whether the work goes beyond established practice. Something that is merely new to your farm is not enough; it must represent an advance beyond what a competent professional in the field would already know or be able to implement straightforwardly.

Contemporaneous evidence is essential, such as:

• Farm and trial records.
• Agronomist or veterinary reports.
• Technical specifications and design notes.
• Trial data, sensor outputs, photographs and maps.

Why Choose Innovation Plus for Agricultural R&D Tax Relief

Agriculture is one of the most under-claimed sectors for R&D tax relief. Many generalist advisers either miss genuine agricultural R&D altogether or over-claim by treating routine farming activity as innovation.

Our Specialist Approach

• We understand farming. Our team works day-to-day with agricultural businesses across arable, livestock, horticulture, and AgriTech. We know where genuine R&D arises – and where it doesn't – so your claim reflects real innovation, not normal good practice.
• We write technically robust narratives. Every claim is backed by a clear, structured technical report that:
• Identifies specific scientific or technological uncertainties
• Explains the baseline of existing knowledge and practice
• Describes the systematic work you carried out to resolve those uncertainties
• Uses terminology and framing HMRC expects to see in compliant R&D claims
• We don't over-claim. Agricultural R&D is under increasing HMRC scrutiny. We focus on building claims that are:
• Evidence-based and defensible under enquiry
• Aligned with HMRC’s definition of R&D for tax purposes
• Free from inflated or speculative project descriptions
• We work on a success-fee basis. There are:
• No upfront costs
• No retainers
• No charges if your claim does not succeed

You only pay when your claim is successfully processed.

• We support you if HMRC enquires. Our enquiry defence service is included as standard. If HMRC raises questions about your claim, we:
• Lead the technical and tax correspondence
• Prepare any additional evidence or explanations
• Represent your position robustly and professionally

Next Step: Get an Honest Assessment

If you’re involved in any of the following, there’s a strong chance you may have a valid R&D tax claim:

• Precision or data-driven farming
• Crop science and varietal trials
• Livestock health, nutrition, or breeding innovation
• Controlled environment agriculture (e.g. glasshouses, vertical farming)
• AgriTech development (hardware, software, sensors, robotics, automation)
• Any structured agricultural research or on-farm trials aimed at overcoming technical uncertainty

Contact us for a free, no-obligation assessment. We will:

• Review your activities against HMRC’s R&D criteria
• Tell you honestly whether your work qualifies
• Explain the potential benefit in clear terms
• Handle the entire claim process if you decide to proceed

No upfront fees. No inflated claims. Just rigorous, compliant R&D tax advice for agriculture.