In 2012 £1.2 billion was paid by the UK Treasury to companies who innovate in the form of tax credits. Why? Because innovative companies are at the forefront of growing the economy. They are the ones that tend to create jobs, become more efficient, and grow more successfully.
R&D Tax Incentives for Food Companies
What does this have to do with food?
Well the answer is “not enough” at the moment. Historically, 90% of this innovation fund that goes to small and medium companies is paid to companies classed as high tech. These may fit the stereotype of innovation, research and development, but in reality a far wider range of companies match the criteria to qualify for some cash back from the government. There are huge opportunities for your business to benefit from R&D tax incentives for food companies.
Claim a piece of the pie
And in our opinion, the food industry is a prime example. There is so much untapped potential with businesses yet to claim R&D tax incentives for food companies. When HMRC pay out an R&D tax credit they are looking for the following:
- An improvement to a core process, product or service
- An element of risk and uncertainty in the outcome
When you think about it that opens up a whole host of scope in the food industry. From the head chef in a restaurant experimenting with a new menu, to a cake producer testing the mixture to get the right consistency or flavour.
R&D Tax Credit in Food Manufacturing
Up and down the food chain
You could look up the chain and find innovation in the way food is stored, packaged or preserved.
Or down the chain and see farmers experimenting with improvements to their processes in rearing animals.
The point is innovation is everywhere and you most certainly do not have to be confined to a laboratory to get a helping hand from the government through an R&D Tax Credit. What you do have to do though is recognise your own innovation and put in a claim because it does not happen automatically.
Leaving a sweet taste
Smaller companies who make a successful claim can receive an additional enhanced deduction of 225% of their qualifying R&D costs. So for instance, if you spent £10,000 developing a new way to extend the shelf-life of your food product, on top of the original £10,000 deducted as a cost you would receive a further £12,500 which you could use to offset your taxable profit.
A recipe for getting started
The first thing to do is to be aware that R&D tax credits exist and are available to any company that innovates. So this includes R&D tax credit for the food manufacturing industry. Hopefully, now you’ve read this article you can tick this off and realise that being in the food industry is especially relevant.
Second, you need to look out for innovation in your own company. Refer to the bullet points above for the basic principles that need to be applied. R&D tax credits are a specialist area and it may be worth speaking to a R&D tax advisers who can not only help you identify a claim, but importantly maximise it so you receive the most benefit possible.