A surprisingly high number of entrepreneurs in the food industry are unaware that they can claim R&D tax credit reliefs. Meaning they are missing out on millions of pounds in tax relief.
The Food and Drink Sector is the largest manufacturing sector in the UK, contributing around 15% of GVA and worth over £73 billion. Which makes it even more surprising that only 3 out of 5 restaurant managers are aware they can claim R&D tax credits.
A diversity of R&D projects happen behind the scenes in hotels, restaurants, and other businesses in the sector, many of which are SMEs. In addition, because of the COVID-19 pandemic, many companies have had to develop new methods to stay in business. Many of these methods fall under R&D.
Examples of Qualifying Activities
We’ve collected a list of activities that qualify for R&D tax credits:
- Improving a product’s taste, texture, or nutritional properties.
- Developing new packaging: for longer shelf life, better transportation, more eco-friendly, etc.
- Improving a product’s shelf-life.
- Developing techniques to reduce costs and wastage without sacrificing the quality of the product.
- New methods to up-scale production.
- Developing new methods and recipes to satisfy new regulations.
- New products to cater for market trends (free-from, less salt/sugar, organic, etc.)
- Development or improvement of machinery to increase production, lower costs, or reduce waste.
- New machinery to produce new products.
- Adapting existing processes to find improvements in cost, efficiency, etc.
- Improving processes to minimise risks of contamination and wasted materials.
- Removing allergens, preservatives, or artificial products.
This list looks extensive but is not complete by any means. Various projects can qualify for R&D tax credits, especially new methods and procedures that you may have needed to develop during the pandemic to stay open. If you think your project may be eligible, contact us to find out how we can help you.
Five Areas of R&D in the Food Sector
There is a lot that drives R&D in the UK’s largest sector. So much it would be impossible to write about it all. So, we have identified the five key areas that drive the R&D in the industry.
- Commercial – This area, while probably the most boring, is one of the most important. Commercial factors include projects such as improving shelf life. Or making products affordable for consumers whilst still being profitable for producers.
- Legal – This encompasses all changes made compulsory by the government or a governing agency. Changes due to COVID-19 are included here. Another example is the sugar tax implemented in 2016. Significant government changes in the industry can boost R&D as businesses try to meet new regulations without sacrificing the product or service.
- Consumer Trends – This area can easily become blurred by marketing drives. However, the constant need to satisfy the consumer market leads to changes in the industry. Now more than ever, companies have to find ways of developing healthy choices, free-from options, and using locally sourced materials, all of which can lead to qualifying R&D projects.
- Ethical – This area covers anything from animal welfare to fair trade, including the debate around genetically modified foods. Anything that can improve the food supply chain can qualify as R&D.
- Change in the Process – This area is mainly behind the scenes. From recipe changes to large-scale modifications to machinery to increase output are likely to require research and development to guarantee a high-quality product.
As you can see, the food and beverage sector is rich in R&D opportunities. The industry is constantly changing, either by government force or by the ever-changing demand of the consumer. Trying to adapt to these changes will promote R&D.
Claiming R&D Tax Credits in the Food and Beverage Sector
R&D tax credits are abundant in the food and beverage sector. Inspired by global food issues, modern-day consumer standards, and changes in government legislation, there is an unlimited number of projects that would require comprehensive research and development.
If you believe your project may qualify for R&D tax credits, don’t hesitate to contact TS Partners. Our R&D experts will be happy to help you through the claiming process.
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