R&D Tax Credits in Food & Drink

Within the food sector, there is so much potential opportunity for an R&D tax credit claim. This could be creating something as simple as a recipe for cake or a new method of preservation.

The food industry is easily worth trillions of pounds because there is pressure to adapt foods to make them healthier, gluten-free, vegan, organic etc. Needs like these can come from both food regulators and consumers causing constraints on the innovators to improve the food.

An example of this, would be when you see products stating ‘New Recipe’ or ‘Now with 20% less sugar’ on supermarket shelves. This can be seen as a marketing technique, however, there will be truth behind it. It is likely that behind the scenes, there was a substantial amount of research and money put into bettering the product – justifying the claims on the packaging.

Pressures in the Food & Beverage Industry:

Commercial Factors – This element of pressure includes making improvements such as prolonging shelf-life of products – this helps supermarkets because they can’t afford stock going out of date on the shelves.

Legal changes – Making changes which are a legal requirement is obviously compulsory for food and beverage innovators. When the government sets a specific standard, it is essential that it is met by the developers. An example of this, is when the sugar tax got put into place. If carbonated drinks had more than 5g of sugar per 100ml, there would be a tax added to the product to justify the amount of sugar it contained. This is just one example of where there will have been a lot of R&D performed in order to meet the laws without affecting the taste of the product.

Trends with consumers – There are many questions you could take into consider within this factor. Some of these could include ‘What product could we turn vegan next?’ or ‘what should we add to the free-from section?’. There are endless trends which food companies must cater for and adapt to – if these factors weren’t considered, we would all still be eating tinned, processed foodstuffs.

Environmental Factors – Many questions surround this factor. ‘How can we make our packaging more eco-friendly?’, ‘how can we make this cruelty-free?’ and ‘how can we make our ingredients support fair-trade?’ are all questions you should consider when conducting Research and Development.

Manufacturing Process – During the production process of food and beverages, there are many different forms of equipment and techniques used to ensure your product is top quality. When you are a manufacturer, it means you may even have to introduce new machinery to cope with higher demand while increasing standards when working on a large scale. As a result of this, the final product will be always be consistent.

Do I qualify for R&D in food and beverage?

Product Development:

Developing food products is one of the most common projects which qualifies for R&D tax

credits. Below are some examples of processes which could allow you to submit an R&D claim.

Time used adapting recipe formulation – eg: development of recipes with fewer additives, experiments with lower salt or sugar content or the creation of gluten-free product variations
Experimenting with new equipment – eg. Development of new food processing techniques
The expenditure on ingredients used, plus heat and water
The staff costs for labour of the experiments
Design of more sustainable packaging
New techniques for waste reduction

Process Adaption:

Changing processes within the production of how the food or beverages are made, is another area in which you can submit an R&D claim. Some examples include:

Adding a robotic arm to assist production
Adding a conveyor belt

All these factors are techniques to assist production which then reduce staffing costs, time spent for creation, and increase the overall output.

Check out our R&D tax calculator

Work out how much your claim could be worth with our easy to use R&D tax credits calculator. Remember we can claim up to two years so make sure you don’t miss out on your innovation fund.

R&D Tax Credits in Food & Drink