R&D tax credits in the food industry
Free-from food is a growing market, and it seems that many consumers purchasing free-from products are doing so out of choice rather than necessity. In 2017, Britons spent an extra £230m on free-from food and drink, showing a definite trend towards the desire for such products.
With various food fads such as vegetarianism, veganism and paleo diets becoming more popular, more and more consumers are associating free-from foods with a healthier diet and choosing free-from options over traditional ones. Of course, research and development is required to help manufacturers meet demand, meaning that R&D tax credits in the food industry are more important than ever.
What R&D work is involved in free-from production?
The starting point for the R&D activity associated with production of free-from food is simply getting a functioning product to market. Gluten, for example, gives bread products structure and stretch properties, so if it is to be replaced, it must be done so with alternative agents that still provide those properties.
As the free-from market becomes more competitive, flavour is a key factor. Where in the early days, flavour had to be sacrificed to an extent, companies are now working to ensure these sacrifices are no longer necessary.
In both instances, experimentation is needed to test the properties and combinations of ingredients that produce the best alternative to the traditional product. Companies in the free-from food industry must also find ways to ensure shelf life and cost remain competitive, both with other brands and with the traditional product.
How can free-from producers benefit from R&D tax credit?
Research and development tax credit for food companies such as those looking at free-from solutions is readily available. The government has left the definition of eligible activity deliberately vague to ensure a wide range of projects can benefit from the rewards.
As long as the activity your business is undertaking seeks to find a solution to a scientific or technological problem, and that the solution is not one that can be easily found by another professional in the field, there’s a good chance it will be eligible for relief.
Qualifying costs include staff wages, utilities and consumables that are directly associated with the project, as well as some sub-contractor costs. These must be documented throughout the project and the amount of relief calculated and inputted on the company’s Corporation Tax Return. SMEs can receive up to 26% on qualifying expenditure, while larger companies can expect a 12% reduction of their corporation tax bill.
Are your projects eligible?
If you think your activity is eligible for R&D tax credits, contact R&D Tax Solutions in Manchester today. We have extensive experience with helping businesses in the food industry make successful claims, and can assist you with your calculations as well as with providing the supporting documentation needed for a claim.
