Food and Beverages
R&D Tax Relief
There is constant pressure for innovation in the food and beverage sector to be either healthier, cheaper, vegan, dairy-free, organic or to comply with ethical or sustainable methods of production. We may chuckle to ourselves as we see another milk alternative being introduced, or get disappointed when our favourite coffee shop doesn’t have the type of milk we like, without even considering the level of research and development that goes into bringing a milk alternative into the market. In this sector, it is estimated that R&D claims are made for only 1% of eligible expenditure, which is phenomenal considering the extent of qualifying R&D activity in the food and beverages sector.
Only 1% of all claims are made by the food and beverage sector, despite being always pushed to innovate by consumer trends and regulation.
R&D worthy activity doesn’t only happen in a laboratory. From new products and flavours to changes in packaging and machinery, there is constant innovation in the food and beverage sector. The fact that only 1% of claims come from the food and beverage sector, highlights that some businesses may not realise the breadth of their R&D activity.
A food and beverage company may be driven to innovation by consumer trends, such as gluten-free alternatives. There are also manufacturing factors that are part of R&D activity, such as having to create more products or those with a longer shelf life, or using new materials to reduce costs. Other factors that push food and beverage companies to innovate could be regulatory changes or sustainability factors, where companies may look for greener alternatives or substitutes for ingredients. With the consumer needs in the food and beverage sector always changing, there is a high likelihood your business may qualify for R&D tax credit, which can act as a welcome source of extra funds.
What is R&D tax credit?
The UK Government’s Research and Development Tax Relief scheme is a way to encourage and reward companies that are investing in innovation.
What qualifies as innovation?
For tax purposes, R&D takes place when you are creating something that will advance the overall knowledge or capability in the field of science and technology. In simple terms, if you are solving industry problems, creating new software, process or materials, you qualify.
The food and beverage sector is diverse and most projects come with their own set of challenges. Improving techniques, products, quality, performance, or creating greener solutions all count toward an R&D tax credits claim.
- Are you developing new methods of processing larger quantities of product?
- Are you improving processes to reduce microbial contamination during manufacturing?
- Are you designing a solution to increase a product’s shelf life?
- Are you developing new technology or automation software to make your business more efficient, such as to manage distribution centers and warehouses?
- Are you developing a raw material substitution?
- Are you improving the texture, stability, flavour or nutritional value of a food product?
- Are you reforming existing products using new or different raw materials?
- Are you eliminating allergens, preservatives or artificial components?
- Are you testing new prototypes or creating trials for upcoming products?
- Are you developing new techniques to reduce or eliminate waste during production?
- Are you developing new technology or methods to be more efficient in your water, fuel and energy consumption?
- Are you developing new environmentally friendly materials for packaging or packaging alternatives?
- Are you working on a way to reduce the environmental impact of fertiliser?
Want to find out whether you can claim 33% of your R&D costs back?
There is a reason it's called innovation.
Think your project qualifies but we did not mention it above? Get in touch with us and let us see whether you qualify for an R&D tax credit.