Which Food & Beverage activities qualify for R&D Tax Credits?

The Food & Beverage industry is the UK’s largest manufacturing sector (larger than Automotive and Aerospace combined), contributing £31.1bn to the annual economy and employing over 450,000 people. Furthermore, some 97% of the UK’s 7,290 Food & Beverage businesses are SME’s whose activities undertaken on new product development (NPD) and in resolving technical challenges in this fast-moving sector often lead to significant amounts of funding being claimed via R&D Tax Credits.

The Food & Drink Industry Report 2020, released by the Food and Drink Federation (FDF) and Santander, highlights the growth opportunities and challenges for the sector.

HMRC statistics relating to Food & Beverage claims

Number of claims: 1,085
Amount claimed: £55m
Average Claim: £50,691
Accounts for 1% of total claims made

Number of claims: 935
Amount claimed: £50m
Average Claim: £53,476
Accounts for 1% of total claims made
*Provisional figures as claims are still being submitted for this period

What type of activities qualify?

Examples of the types of activity which are likely to qualify for R&D Tax Credits within the Food & Beverage sector include;

  • Improving taste, texture, and nutritional properties within a product
  • Development of new packaging solutions
  • Development and trials of new methods to extend product shelf life
  • Development of techniques which lead to reduction of costs, raw material wastage and improvement in overall consistency of a product
  • Activities to scale up production, usually from samples created in a test kitchen
  • Development activities carried out to satisfy new regulations and compliance
  • Development of new products to cater for growing market trends, such as gluten free, vegan, dairy free, low carb, reduced fat and sugar-free products, which often require an iterative development process to achieve the desired outcome
  • Development / improvements made to existing machinery to increase production capacity
  • Development of new machinery for the production of new products and ongoing testing requirements
  • Adaptation of existing processes to seek improvements in efficiency, cost and lead times
  • Improved methods for minimising risk of contamination and materials wastage
  • Removal of allergens, preservatives or artificial dyes
  • Investigative work carried out by food scientists to achieve an advance in overall knowledge and capabilities in food manufacturing

What types of expenditure can be included?

R&D Tax Relief can be predominately claimed on revenue expenditure in the following cost categories:

, Which Food & Beverage activities qualify for R&D Tax Credits?, Innovation Tax

With experts who have worked in the F&B sector for many years, Innovation Tax is ideally placed to identify the full extent of qualifying activities to ensure businesses are fully benefiting and maximising innovation tax incentives.

Innovation Tax specialise in helping companies access vital funding and tax incentives to enable their businesses to grow, increase profitability, reduce risk and enable further investment in R&D and capital investments.

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