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Food firms could be missing out on thousands in R&D tax relief

By William Dodds

- Last updated on GMT

R&D includes new product development and reformulation
R&D includes new product development and reformulation

Related tags SME R&D New product development Tax Corporation tax Innovation

Firms in the food industry could be missing out on corporation tax reductions after accounting for a fraction of R&D tax relief claims last year.

In 2022, just 1% of R&D tax credit claims submitted by small and medium-sized enterprises (SMEs) came from firms in the food industry, Research and Development Specialists (RDS) has revealed.

The average R&D tax claim by food businesses was valued at £18,708, while the average successful claim regardless of industry was £46,347 per business.

Claims by the food sector came to £15.1m in total which represents just 0.4% of the overall claim value by businesses across the UK.

HMRC Research and Development Tax Scheme

Any UK limited business can apply for tax relief under the HMRC Research and Development Tax Scheme, with SMEs that employ less than 500 people able to receive an additional 130% deduction when calculating the taxable profit.

Having been introduced in 2000, RDS research has shown that food businesses are not taking full advantage of the scheme, with managing director Mark Joyner bemoaning the fact that it is not widely known about.

Lots of companies are missing out​,” Joyner said.

We’ve previously had success within the food and beverage sector, finding that companies working in this area have invested in qualifying activities like conducting research into health and ingredients or developing new equipment or processes to improve the scale, speed or efficiency of manufacturing, bottling, packaging or canning​.”

R&D in the food industry

A number of activities that food businesses undertake each year would see them qualify for the scheme, including developing a new product or experimenting with reformulation.

“A lot of people think it sounds too good to be true, some are time poor and don’t have the time to investigate the scheme properly and some are just unaware that it even exists,”​ Joyner added.

In other news, food firms using a new digital carbon labelling systems are projected to cut emissions by 30%​ within the next two years.

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