Food & Beverage R&D Tax Credits

Your Food or Beverage company may be eligible for a tax credit or cash rebate of up to 33% of your development expenses through the Research and Development Tax Credit program.

The UK’s largest manufacturing sector, the Food and Beverage industry is a critical component of a vast and complex supply chain. On average, Food & Beverage R&D claims are valued at £23,809, and the sector employs more than 450,000 people. With an annual economic production of £31.1 billion, it is the UK’s largest manufacturing industry, surpassing the combined Automotive and Aerospace sectors.

What counts as R&D for tax relief purposes?

We suggest evaluating your project against the following three criteria to determine if it meets the requirements for R&D classification in the eyes of HMRC:

• Is there technological uncertainty? If you took a competent professional in your field and gave them the documentation for your project, would the answer to your problem be readily deducible? If not, then you likely attempted to overcome some sort of scientific or technological uncertainty for your project to qualify.
• Have you achieved an advancement? The goal of any R&D project should be to take any given technology beyond what’s available in the public domain. So, if you’re doing something that’s never been done before to your knowledge, something that’s been done by other companies before in a way that was their own IP or advancing an existing technology/approach beyond what it was natively capable of, then you could have done exactly that.
• Does it demand competent professionals? A professional in the relevant field shouldn’t be able to solve uncertainties with ease. A competent professional is one who is anticipated to be familiar with the pertinent scientific and technological principles involved, aware of the current level of knowledge, and has acquired experience and is acknowledged as having a successful track record.

Qualifying Food and Beverage R&D activities include:

• Adding a robotic arm or conveyor belt to production processes
• Formulating products to meet regulations and guidelines
• Scaling up manufacturing using industrial techniques and reducing waste and inconsistencies
• Developing healthier and tastier products with longer shelf life and better freezing/defrosting properties
• Catering to growing market trends, such as gluten-free, vegan, dairy-free, low-carb, and sugar-free products
• Improving machinery to increase production capacity
• Conducting investigative work in food science to advance overall knowledge and capabilities in food manufacturing
• Spending time on recipe formulation, experimentation, and market research (although market research may not qualify as R&D)

Expenditures that can be accounted for in your R&D claim:

• Payroll/staffing expenses for relevant professionals
• Subcontracted R&D for the creation of novel prototypes and technologies
• Consumable materials used in research.
• Software and software licenses used in R&D
• Compensation paid to employees for participating in R&D trials.
• Contributions to independent research institutions for joint research projects
• Cloud computing and data storage costs incurred in R&D, starting from April 2023.

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