Can Food and Beverage manufacturers claim R&D Tax credits?

Food science is a rapidly developing field with very interesting R&D Developments. Whilst simple cosmetic or aesthetic changes such as changing a food menu or adding blueberries to your croissant will definitely not qualify for R&D Tax relief, we explore areas that might have qualifying R&D tax.

What activities can Food & Beverage clients claim on?

Research and Development (R&D) tax credits are designed to encourage innovation for activities in this industry to qualify for R&D tax credits, they must meet specific criteria that demonstrate advancements in science or technology. Here are some examples of qualifying activities we have claimed for in the food and beverage industry:

01 New product development

• Developing new food products to meet specific dietary, allergen-free, or clean-label criteria (e.g. gluten-free, vegan, low sugar/salt).

• Reformulating products without compromising texture, taste, or shelf life.

• Creating products with extended shelf life or improved nutritional profile.

02 Process innovation

• Designing or adapting manufacturing processes to work with novel ingredients or meet new quality/safety standards.

• Scaling up recipes from kitchen/lab to full production while overcoming texture, stability, or flow challenges.

• Optimising cooking, baking, fermenting, or chilling times to improve consistency and energy efficiency.

03 Ingredient substitution or reformulation

• Replacing artificial ingredients or allergens with natural alternatives while maintaining product integrity.

• Reformulating recipes to reduce sugar, salt, fat, or preservatives in response to regulatory or consumer pressure.

• Developing alternative protein products (e.g. plant-based meat substitutes) that mimic real meat in taste and texture.

04 Packaging and shelf life

• Developing new packaging materials or formats to improve shelf life or sustainability (e.g. compostable or recyclable packaging).

• Modifying packaging processes to maintain product freshness or prevent spoilage.

05 Automation and equipment design

• Customising or designing machinery to handle new ingredients or unique production needs.

• Integrating robotics, sensor systems, or AI for improved consistency or reduced labour needs.

• Adapting off-the-shelf equipment to fit bespoke manufacturing processes.

06 Quality assurance and food safety

• Developing novel methods for microbial control, contamination prevention, or temperature monitoring.

• Creating new preservation techniques that don’t alter the sensory characteristics of the product.

01 Recipe and formulation development

• Developing new beers or spirits that meet unique flavour profiles, alcohol contents, or fermentation styles.

• Working with non-traditional ingredients (e.g. gluten-free grains, fruits, spices) and adapting fermentation accordingly.

02 Yeast and fermentation research

• Testing new yeast strains or fermentation conditions to achieve target ABV, flavour, or stability.

• Solving issues with yeast behaviour in non-standard brewing environments.

03 Process improvements

• Optimising mash schedules, hopping techniques, or fermentation profiles for efficiency and consistency.

• Reducing waste or energy usage in brewing, distilling, or bottling.

04 Packaging and carbonation

• Developing improved canning or bottling techniques to reduce oxidation or improve carbonation stability.

• Innovating kegging systems or container design for quality preservation.

05 Alcohol-free product development

• Creating zero or low-alcohol variants while maintaining taste and mouthfeel — particularly challenging and often eligible for R&D relief.

01 Ingredient substitution

• Reformulating to remove gluten, dairy, eggs, or allergens while keeping the same texture and rise.

• Developing recipes that retain moisture and shelf life without preservatives.

02 Texture and consistency

• Resolving issues with dough structure, rise, or bake time due to new ingredients or formulations.

• Improving consistency across batches through process refinements or automation.

03 Shelf life and packaging

•Innovating new packaging solutions to reduce staling or spoilage.

• Testing natural preservatives or modified atmosphere packaging for baked goods.

04 Heat and process control

• Reducing baking time or temperature without affecting product quality.

• Designing new baking or proving processes for artisanal or enriched doughs.

Qualified Projects

What Qualifies as R&D in Food and Beverage Industry?

R&D tax relief occurs when firms seek to make an advance in a field of science or technology whilst overcoming technological or scientific uncertainties. Typical projects that may qualify for R&D Tax relief include:

New Product Development:

Developing new or improved food products, beverages, or ingredients.
Creating healthier or more sustainable food formulations.
Formulating products to meet specific dietary requirements, such as gluten-free, vegan, or allergen-free options.

Process Improvement:

Enhancing manufacturing processes to improve efficiency, reduce waste, or increase scalability.
Developing new preservation methods to extend shelf life without compromising quality.
Implementing automation or robotics to streamline production.

Quality and Safety Enhancements:

Innovating packaging solutions to improve food safety, freshness, or sustainability.
Developing methods to reduce contamination risks or improve sanitation processes.

Sustainability Initiatives:

Researching ways to reduce the environmental impact of food production, such as water or energy usage.
Developing sustainable sourcing methods for raw materials.
Innovating in waste management practices, such as upcycling food waste into new products.
Development of more sustainable packaging.

Analytical and Testing Methods:

Developing new testing methods to ensure product consistency and quality.
Implementing advanced analytics to understand consumer preferences and trends.
Conducting sensory evaluations to improve taste, texture, and overall product experience.

To qualify for R&D tax credits, these activities must involve overcoming technological or scientific uncertainties, and the outcomes should not be readily deducible by a competent professional in the field. Documentation of the R&D process, including the challenges faced and the solutions developed, is crucial to substantiate claims for tax credits.

Subsidised/ Subcontracted R&D

If you are a contract manufacturer providing white label solutions for brands a when the final deliverable is a product to a client and the R&D work formed part of the contract with your client, it’s likely that this activity will be funded directly or subcontracted by a third party, which would mean the project would have to be treated under the large company scheme (old RDEC scheme). This is a complicated area of the legislation to apply and it has resulted in a number of tribunal cases to test how the rules should be applied.

How We’ll Support You

InnoFund employ Scientists, PhD engineers, ex-HMRC inspectors a Chartered Accountant and CEDR accredited mediators to run through your projects with a fine-tooth comb leaving no stone unturned whilst maximising HMRC compliance. We manage your claim proactively, minimising your time investment so that you can focus on core business with the following in scope:

Identifying the appropriate scheme for your business.
Conducting a comprehensive review of your R&D activities to maximise your claim.
InnoFund take the burden of report writing to free up your time
Prepare a claim that minimises potential HMRC queries.
Unrivalled HMRC dispute resolution headed by the UKs leading R&D Tax compliance expert with accredited mediators in the event of HMRC enquiries

Safeguard Your R&D Tax with InnoFund

Partnering with InnoFund gives companies a unique opportunity to utilise SecuRD™, our
proprietary solution which we believe is the safest way to claim R&D Tax. We add value to clients by leveraging InnoFund’s expertise in both R&D lifecycle management and R&D Tax Credits, act today to maximise the success of your future R&D claims from services such as:

01 Analysing previous R&D and benchmarking it against the baseline of your industry

02 R&D lifecycle management consulting and R&D road mapping to increase your chances of innovation and the size and security of R&D claims in the future

03 Safeguard future R&D relief by strategically reviewing your current operations to maximize benefits under available R&D funding options.

04 Visualise the value of a future tax benefit with upcoming R&D projects and allow commercial teams to tender for work more competitively

Beyond R&D Tax

Food and Beverage firms should explore all R&D incentives, from tax credits and grants for upfront product development work to Research and Development Allowances (RDA) for capital spend on prototype structures. InnoFund can perform the InnoGuard test and identify patents in your products or processes allowing you to reduce your corporation tax on related revenues through Patent Box for sales or licensing of protected technology, packaging or formulations.

We also help identify other sources of R&D support and plan your R&D strategy, considering available incentives and grants. Our holistic approach ensures continuous support throughout the business lifecycle, not just during the claim preparation.

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