This article and summary video explain how UK food & drinks manufacturers can qualify for R&D tax relief under the RDEC scheme. With examples from cake makers to seed breeders, it highlights what HMRC looks for — and what usually doesn’t make the cut.
Despite there being some high-profile cases where false R&D claims have been linked to the food and drinks industry, it is also clear that innovation in the food and beverage sectors often drives eligible R&D activity, especially as businesses adapt to shifting consumer tastes, tighter regulations and demands for more efficient, sustainable operations. R&D tax relief can support a wide range of these innovation efforts.
Here are some examples:
New Product Development
Creating new food and drink products usually involves applying scientific knowledge to deliver innovations that meet modern dietary needs and preferences. This includes using food chemistry to replicate textures or flavours with plant-based or allergen-free ingredients, or employing biotechnology to develop sustainable proteins through novel fermentation methods. These challenges often require significant experimentation with ingredient interactions and metabolic processes, especially when aiming to mimic traditional sensory profiles.
Process Innovation
Improving food manufacturing processes often draws on engineering, automation, and microbiological principles. R&D might involve developing systems that maintain hygienic standards under new production conditions, integrating advanced machinery, or automating manual tasks. Scaling from lab or test-kitchen trials to industrial production frequently presents issues around ingredient behaviour or contamination control, requiring rigorous testing and adaptation to meet quality and regulatory demands.
Packaging Advancements
Innovations in packaging often blend material science, engineering, and food preservation research. Projects may focus on biodegradable materials, advanced barrier coatings, or smart technologies like embedded sensors to monitor freshness. Modified atmosphere packaging and high-pressure processing are also explored to extend shelf life. These efforts often require scientific investigation into how materials interact with specific food products and how environmental factors affect stability and safety.
Ingredient and Nutritional Improvements
R&D in this area may involve both food chemistry and nutritional science to reformulate products while maintaining sensory appeal. Whether reducing sugar or enhancing nutritional content, each change involves complex ingredient interactions. Achieving desired textures and flavors while meeting health targets often demands iterative testing, chemical analysis and controlled trials to solve technical challenges around taste, mouthfeel and shelf stability.
Food Preservation Techniques
Preservation R&D frequently involves food microbiology and the development of novel chilling, freezing, or sanitization techniques. Research into natural antimicrobials or the role of beneficial microbes in fermentation is advancing shelf life and safety. These efforts require controlling microbial activity with scientific precision and adapting new preservation technologies from other industries to the specific needs of food systems.
Here is a list of some of the activities that are unlikely to qualify:
Routine Testing: Standard quality control and testing don’t qualify unless the testing itself is part of developing a new production method or solving a technical problem.
Market Research: Research into consumer preferences or trends (including using the public to taste test a product) and requirement gathering are not eligible R&D activities.
Aesthetic Changes: Cosmetic and aesthetic updates to products or packaging (like changes in appearance or the taste profile) are excluded, unless they are part of making an advance through a functional improvement, such as better shelf life or safety.
Business Innovation: Making improvements in business models, marketing or operations don’t qualify.
Commercial Costs: Expenses linked to manufacturing or distributing products post-development are not covered—only the development phase qualifies.
Overseas R&D: For accounting years starting from April 1, 2024, overseas R&D expenditure on contractors or non-UK payroll staff, is ineligible unless an exception exists, because the work can’t reasonably be done in the UK. Undertaking R&D overseas for cost or convenience reasons, does not count as an exception.
Here are some examples of qualifying R&D projects in food manufacturing:
Cake Manufacturer
Developing recipes with gluten-free ingredients that have acceptable texture and taste; ensuring structural soundness of cakes; testing cooking processes for even baking; addressing ingredient availability changes; scaling up production for mass manufacturing while maintaining gluten-free status.
Protein Snack Manufacturer
Developing a new recipe using vegan alternatives to replace animal-containing ingredients in snack bars with a high protein content, ensuring the same texture, consistency, and protein levels as the original dairy-based product, through iterative testing and refinement of ingredient ratios where the formula for a successful ratio was unknown.
Fruit Grower
Research and development of methods for growing fruit under protection from the weather, including trial areas, to improve yields and enable the supply of a variety of fruits throughout the year.
Ice Cream Maker
Seeking to find a substitute for a specific emulsifier that is used in ice cream base recipes because it that has the effect of blending the fat and water, helping the product to withstand heat shock and the melting rate. This involved research, experimentation, batch testing and manufacturing trials, with alternative products to find one that would have at least equal melt resistance, across a wide range of ice cream recipes and flavours.
Seed Breeder
Breeding seeds through cross fertilization and genetic tracking in growing trails over many years with the aim of developing new seeds, that display improved characteristics, such as greater disease resistance and improved yield in a range of growing conditions.