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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
2016-17
Number of claims: 1,085
Amount claimed: £55m
Average Claim: £50,691
Accounts for 1% of total claims made
2017-18*
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:
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.
