Reducing calories but maintaining taste: how R&D tax credits can help the food industry 2018-04-05T11:30:30+01:00

Food manufacturers are having to cut the calories in their products by 20% by 2024

This month, the government has challenged food manufacturers to cut the calories in their products by 20% by 2024. Major companies are being called upon by Public Health England to change their manufacturing processes and reformulate products to make them healthier, therefore contributing to the overall goal to reduce obesity, particularly in children.

Changing the composition of food is, of course, very difficult and requires a great deal of research and development work by businesses. This may include using different combinations of ingredients to maintain or improve flavour, tailoring fats or oils to contain extra nutritional value, or finding substitutes for salt and sugar that can preserve the shelf life of food with the same efficacy.

R&D tax credits and food development

Although the initiative brings many challenges to organisations throughout the supply chain, the government is also prepared to reward companies for their efforts. UK businesses looking to undertake research and development activity to meet the government’s demands can benefit from R&D tax credits. Food reformulation, development of new packaging, improvements in shelf life and more all qualify as eligible activities, meaning companies looking for viable solutions to the calorie cut can claim significant remuneration for their efforts.

Two schemes are available: the SME scheme and RDEC scheme. The former is for businesses with fewer than 500 employees and which are turning over less than€100 million annually. Under it, up to 26% of R&D expenditure can be claimed back (26p for every £1 spent). This increases to 33% for companies running at a loss. The RDEC scheme is for larger companies and offers up to 12% in relief for qualifying expenditure.

Claiming for eligible projects

Claiming for R&D tax credits in the food industry is much the same as for other sectors. All qualifying costs – including utilities, consumables, staffing costs, and certain sub-contractor costs – must be recorded, and the calculation for R&D relief made based on whether the business falls under the SME or RDEC scheme. The calculation is then inputted on the Corporation Tax form, and any necessary supporting documents supplied alongside it to evidence the eligibility of the claim.

Although this sounds straightforward, businesses engaged in research and development will know it’s rarely a simple procedure. Claiming R&D tax for food manufacture is complex and demanding, requiring comprehensive records of expenses and activity to be kept. As such, professional help is often sought.

Get help with claiming for research and development tax credits for food development

With extensive experience in helping businesses in the food and drink industry to make successful claims, R&D Tax Solutions can offer support and advice when it comes to your claim. Not only can we confirm the eligibility of your project, we can also help you collate the necessary information and prepare the supporting documents for your CT form. Contact us today to find out how we can help.

Average R&D tax claim is £56,000

Ask us to review your R&D tax relief claim on your behalf. With our unique fee strcuture you don't pay us a penny until your R&D claim succeeds and provides a benefit to your business!

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