Inventions are made by people in aprons, not just lab coats. And as such you could be entitled to research and development tax credit for innovations in your food business.
R&D Tax Credits for the Food Industry
R&D tax credits in food and drink are more common than you may realise, so be sure not to miss out! Discover how much you could be entitled to with randd’s expertise and tax calculator.
R&D tax credits for the food industry
Consider how you may already qualify:
- Have you tweaked a recipe to include less allergens?
- Have you amended and adapted a recipe for wholesale?
- Have you upgraded production to multiply your hourly quantity?
- Have you created packaged food that stays fresher for longer?
- Have you turned a traditional meal into a convenient fast food?
- Have you modernised a classic dish to fit a certain dietary requirement?
- Have you created a unique drink that your customers can’t get enough of?
R&D tax credits in the food industry are simmering and ready to be taken off the hob. Simply attempting improvements could qualify your food business for R&D tax credits.
More examples for food R&D tax credit eligibility:
- Improved waste reduction
- Smarter/sustainable packaging
- Healthier versions of ready meals
- Development of allergen-free products
The above are a few examples of what goes into the R&D food industry tax credits pot. Consider what areas your products/processes fall into and enquire how randd can help with your claim.
Why are R&D tax credits offered for food businesses?
R&D tax credits and food businesses go together like mac and cheese. There is significant funding for R&D food and drink tax credits, as they can stimulate:
- Cash flow
- Job creation
- Competitiveness
- Economic growth
The food and drink industry has progressed alongside culture, catering to:
- Rise of the vegan diet
- ‘Free-from’ product requirements
- Growing ethical concerns about traditional methods
- Social consciousness and increasing desire for proper business practice
Developing modern products and ethical practices can qualify food businesses for R&D tax credits. Food research and development tax credit is both a rewarder and motivator in this respect.
Millions of people in the UK have allergies to common ingredients, such as nuts and peanuts, and over 60% of people in the UK are categorised as having dietary requirements.
These examples are food for thought, giving you a taste of how there is scope for R&D tax relief in the food industry.
R&D in the food industry
Research and development in the food industry has cooked up some amazing inventions. The funding that R&D food tax credits provide has been essential to many breakthroughs and will continue to be.
- Faster-producing products
- Food freshness optimisation
- Freezing and defrosting improvements
- More sustainable and process-efficient
…not to mention the desire for food to be downright tastier and healthier, which applies to the vast majority of us!
Watch this space: An already huge and fast-growing area of food R&D is the development of meat substitutes, which has vast potential considering the emergence of this is new and therefore still in its early stages of development.
What qualifies for R&D tax credits for food businesses?
There are various types of projects that qualify for R&D tax credits in the food and drink industry. Whether you have stumbled into an innovation or consciously embarked on a project, you may be surprised to learn which activities qualify.
Have you highlighted a gap in the market with no current solution available? Classic examples of research and development tax credits fall under the area of experimentation. If you use your business’ time, cost and resources to test and experiment innovations such as:
- Improved waste reduction
- Lower salt and sugar products
- New food processing techniques
- Creating recipes with fewer preservatives
…then you could be entitled to R&D food tax credits!
Building a case, detailing the methodology used, costs, failures and successes is something you don’t need to do alone. Seek expert consultation from the team at randd before taking any steps.
What costs can be claimed as R&D tax credits for food businesses?
The scope for enhanced expenses relief includes but is not limited to:
- Cost of cooking materials
- Power costs of running machinery
- External agency and subcontractor costs
- Employee salaries (including NI and pension contributions)
Is your company making a loss?
We advise seeking expertise in this field to suggest the best solution for you, such as:
- Surrendering allowable loss for a tax credit (14.5% rate)
- Carrying forward allowable loss and offsetting it against your company’s future profits
Making the most profitable decision can be hard to work out. Instead, seek the help of randd.
Eligibility for R&D tax credits in the food industry
The food and drink industry is an especially open area for niche and specialist businesses to thrive and innovate.
Developing healthier foods and beverages, using plastic-free packaging, improving shelf life without compromising taste and creating brand new products are just some of the activities that can qualify your business for R&D tax relief in the food sector.
Currently, there are two types of R&D tax relief, different for SMEs and larger enterprises (RDEC scheme).
Main qualifying criteria:
- Limited company certified
- Registered for corporate tax
- < €100M annual turnover or < €86M balance sheet
- Not in receipt of subsidy control (for the R&D project)
RDEC specific criteria:
- > 500 members of staff
Expenditure credit is calculated at a rate of 20% of the company’s qualifying R&D expenditure.
SME specific criteria:
- < 500 members of staff
If R&D expenditure is at least 40% of total expenditure, a higher payable tax credit rate of 14.5% can be claimed.
* Having external investors may affect your SME status
Randd provides expert support for both types of tax relief.
The R&D tax structure changed in April 2024 in relation to the percentage of business expenditure spent on R&D purposes. Therefore, seeking professional expertise is advised.
How do R&D tax credits for food businesses work?
Claims can be made within two financial years of completing a qualifying project and are usually approved within 28 days.
Follow GOV.UK guidance on factors prohibiting when you can and cannot claim, as well as when and which costs qualify.
Understand fully the possible entitlements you have – not having full understanding will likely reduce the amount of tax credits you receive.
Firstly, you will need to submit a company tax return and complete the single iXBRL computations file. You must submit additional claim and additional information forms, ensuring boxes 656 or 657 are ticked. You may also be required to submit the supplementary form CT600L.
You will need to build a strong case regarding your research and development activities, and how much tax credit you are eligible for. Be sure to tick every box possible and be confident in the process.
Alternatively, seek the services of a best-in-class expert at randd, who will gladly do the nitty-gritty legwork for you and ensure you receive the maximum entitlement!
Success claiming R&D tax credits for food businesses
Orange you glad you chose randd?
A Hampshire-based specialist fruit grower received £168,000 through their first ever R&D Tax Credits claim. The business grows, packs and distributes fruits to supermarkets across the country. They carry out research and development methods for growing fruit under protection from the weather, which also results in better working conditions for staff.
Research and development, such as trial areas for growing the fruits, is vital for responding to customer requirements including the supply of a variety of fruits throughout the year. The fruit growers also established a conservation plan in partnership with the RSPB to enhance natural biodiversity and monitor the local wildlife.
Expert support claiming R&D tax credits for food businesses
Navigating the intricacies of food R&D tax credit eligibility and submitting tax credit claims/forms can be unnecessary plates to have to spin.
At randd, we are passionate about rewarding innovation, particularly in the food and beverage industry. Our experience and expertise in R&D tax will help maximise the potential amount of tax credit you receive. Why settle for less?
Since 2008, we have taken ownership of thousands of cases, claiming millions for UK businesses with an average of £50,000 per sum.
Why do it alone? We would love to share our success with you.
Contact our team of experts by calling us on 01332 409 711 or emailing [email protected]
