Research & Development (R&D) tax relief is often overlooked by food and beverage manufacturers, product developers, food scientists, and food clinical researchers.

Who can claim?

Food and beverage companies that are either profit-making or loss-making for tax purposes. If you have spent money on innovation, you can claim a generous corporation tax deduction or cash repayment from HMRC.

SME R&D Tax Relief – How much is it worth?

The relief can be substantial. Loss-making businesses can claim a cash repayment from HMRC of £33,350 for every £100,000 spent on qualifying R&D expenditure such as staff costs, subcontractors, consumable materials and equipment, utilities (power, water and fuel) and computer software. Profit-making businesses can benefit by reducing their corporation tax bill through a 230% enhanced deduction.

What qualifies as R&D activity?

Many businesses don’t understand what constitutes qualifying R&D activity, over-estimate the level of innovation required, or have the perception that the rules for making a claim are onerous.

To qualify, there must be an advance (or an attempted advance) in a field of science or technology. This sounds quite restrictive, but in practice it could apply to any business that spends money on developing a new, or improving an existing product, service or process that constitutes an ‘advance’ in science and technology. The term ‘science and technology’ is very broad and includes food science.

That ‘advance’ doesn’t have to be cutting edge. It could mean replicating a well-known dish where the recipe is a trade secret; making an existing product taste the same, but with lower sugar or salt content; creating a new range of vegan pizzas; or even developing a range of plant-based cocktails.

Earlier this year, we secured over £180,000 for a multi-site restaurant for a number of initiatives, including developing a thinner, more pliable and elastic tortilla product and developing a new low calorie vegan menu.

It may still be possible to claim R&D tax relief for a product, service or process that has already been developed i.e. non-alcoholic spirits, but the exact details of which is not publicly available, readily deducible or further investment is required to improve the taste, texture or nutritional content.

Examples of F&B activity that may qualify for R&D: