R&D tax relief is a tax incentive from the UK Government designed to encourage innovation by allowing all businesses to reclaim some of the money they have spent on developing a new, or improving an existing, product, service or process. The scheme has been around since 2000 and last year over 25,000 UK companies claimed over £2.9bn in tax relief.
Our specialist F&B knowledge means we can identify valid R&D projects within the F&B industry. In recent months, we have secured over £70 million in R&D tax relief, including: £250,000 for a celebrity chef with over 6 restaurants and delis, £96,000 for a premium Kosher caterer and £70,000 for a multi-site vegetarian restaurant group.
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.
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.
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.
✓ Improving the taste, texture or nutritional content
✓ Incorporating new sustainable ingredients
✓ Producing sample batches in a test kitchen
✓ Creating new packaging to improve shelf life, durability and/or product integrity
✓ Reducing materials or using more environmentally friendly materials in packaging
✓ Introducing new or alternative materials to improve packaging
✓ Developing techniques that will reduce costs and/or improve product consistency
✓ Redesigning processes to comply with new legislation
✓ Improving machinery and equipment to ensure safe and hygienic handling of food
✓ Creating new methods for minimising contamination, scrap, waste and spoilage
✓ Increasing energy efficiency of water, fuel and utilities through introduction of new technologies
✓ Developing processes to convert waste to energy
Corporate & R&D Tax Partner