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R&D Tax Credits for Food & Beverage Companies

Food and beverage businesses are constantly developing new products, improving recipes, extending shelf life, reducing sugar, salt or allergens, improving production efficiency and responding to changing consumer, retailer and regulatory demands. Where your business is developing new formulations, improving manufacturing processes or overcoming uncertainty around taste, texture, stability, safety, packaging or scale-up, you may be carrying out qualifying R&D. InnoFund helps food and beverage companies identify eligible activity, prepare compliant R&D Tax Credit claims and protect future innovation funding opportunities.

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Sector innovation

Innovation in Food & Beverage

Innovation in the food and beverage sector often happens through practical testing, reformulation, production trials, ingredient substitution, shelf-life work and process improvement. Qualifying R&D may arise where a business is not simply changing a product for commercial reasons, but is trying to resolve scientific or technological uncertainty around formulation, manufacturing, preservation, consistency, safety, sustainability or scale-up.

This includes work across:

New product development
Recipe reformulation
Ingredient substitution
Shelf-life extension
Food safety innovation
Sustainable packaging
Process improvement
Automation and robotics
Low sugar and low salt products
Vegan and allergen-free products
Brewing and distilling innovation
Bakery product development

Food and beverage R&D is often strongest where the evidence shows practical trials, failed formulations, process changes, stability testing or production constraints that had to be worked through systematically.

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Qualifying R&D

How Food & Beverage Companies Can Qualify for R&D Tax Credits

Food and beverage companies may qualify for R&D Tax Credits where they are seeking an advance in science or technology and have to overcome technical uncertainty. Qualifying activity can arise across product development, ingredients, manufacturing, packaging, shelf life, food safety, automation, brewing, distilling and bakery processes.

New Product Development R&D may arise where a food or beverage business is developing a new product that has to meet specific technical requirements around taste, texture, nutrition, stability, safety, shelf life or production performance. This could include gluten-free, vegan, allergen-free, low-sugar, low-salt, high-protein or clean-label products where the final outcome could not be readily predicted.
Ingredient Substitution and Reformulation Food and beverage companies may qualify where they are replacing ingredients, reducing additives, removing allergens or reformulating products without compromising quality. The R&D often sits in the uncertainty around how ingredient changes affect mouthfeel, structure, rise, stability, preservation, flavour, appearance or manufacturing behaviour.
Process Innovation and Scale-Up Projects may qualify where a business is developing or adapting manufacturing processes to improve consistency, efficiency, safety or scalability. This could include scaling recipes from kitchen or laboratory batches to full production, changing cooking, baking, chilling, fermenting or bottling processes, or resolving flow, texture, stability or repeatability issues.
Packaging and Shelf-Life Development R&D may arise where a business is developing packaging, preservation or storage methods to extend shelf life, maintain freshness, reduce spoilage or improve sustainability. This may include modified atmosphere packaging, recyclable or compostable materials, oxidation control, carbonation stability, natural preservatives or new sealing and filling processes.
Automation, Equipment and Production Technology Food and beverage businesses may qualify where they are designing, customising or adapting equipment to handle new ingredients, production methods or quality requirements. This could include robotics, sensor systems, AI-led monitoring, automated dosing, bespoke production lines or modifications to off-the-shelf equipment.
Quality, Safety and Contamination Control R&D can arise where a business is developing new methods to manage microbial risk, contamination, sanitation, temperature control, preservation or product safety without damaging taste, texture or quality. Routine quality assurance is unlikely to qualify, but technical development work that resolves uncertainty may be eligible.

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A note from Simba Mareverwa

Food & Beverage R&D Claims Need to Separate Product Development from Technical Uncertainty

Food and beverage projects can look like normal product development from the outside, but many contain genuine scientific or technological uncertainty. A business may be trying to remove an allergen, reduce sugar, improve shelf life, replace artificial ingredients, develop a low-alcohol drink, scale a recipe from kitchen to factory or maintain texture after changing a formulation.

HMRC will not accept a claim simply because a product is new, healthier, sustainable or commercially successful. The claim needs to explain what technical problem had to be solved, why existing methods were not enough, and what testing, reformulation or production trials were carried out.

Simba Mareverwa, InnoFund's Head of Compliance and Tax Disputes, helps ensure food and beverage R&D claims are reviewed with compliance at the centre. His focus is making sure claims are not built around broad claims of innovation or product improvement, but around clear technical evidence, eligible activity, competent professional input and defensible methodology.

Simba Mareverwa

Head of Tax Compliance & HMRC Disputes

20+ years in corporation tax compliance, including leadership of HMRC disputes.
Extensive experience defending UK R&D Tax Credit claims under enquiry.
Patent Box claim and enquiry experience dating from the scheme’s introduction.

Speak to Simba Mareverwa

“Would highly recommend, they know their stuff! They assisted greatly with an R&D claim rejection by HMRC.”

“Excellent from start to finish, lovely team and a great result. Highly recommended.”

Clear boundaries

Not Every Food or Beverage Project Qualifies for R&D Tax Credits.

Not every product update, recipe change or production issue will qualify for R&D Tax Credits. The key question is whether the business faced scientific or technological uncertainty and carried out systematic work to resolve it.

Examples of work that may not qualify include:

Simple menu changes
Basic flavour changes
Routine recipe tweaks
Standard product launches
Cosmetic packaging updates
Routine quality control
Standard compliance testing
Normal production runs
Off-the-shelf equipment installation
General market research
Commercial taste testing only
Work after uncertainty is resolved

Food and beverage projects often contain a mixture of qualifying and non-qualifying activity. InnoFund helps separate commercial product development from genuine R&D so the claim is accurate, compliant and defensible.

Eligible expenditure

Eligible R&D Costs for Food & Beverage Businesses

Food and beverage businesses may be able to claim relief on qualifying costs linked to eligible R&D projects, including:

Food technologist staff time
Product developer staff time
Production and technical staff time
Technical director time
Employer NIC and pension costs
Subcontracted R&D, where eligible
Externally provided workers
Software used for testing or monitoring
Cloud computing and data costs
Trial ingredients and materials
Prototype packaging costs
Testing and analysis costs

The treatment of trial ingredients, consumables, prototype packaging, testing, subcontracted work, externally provided workers and client-funded development can be particularly important in food and beverage R&D claims.

InnoFund helps identify which costs are eligible and ensures the claim is built around the qualifying technical work, not just the wider commercial product launch.

Evidence & scrutiny

HMRC Risk Areas for Food & Beverage R&D Claims

HMRC is applying greater scrutiny to R&D Tax Credit claims, including claims from food, drink and manufacturing businesses. A strong claim must explain the technical uncertainty clearly and show why the work went beyond routine product development, taste preference or commercial reformulation.

Common risk areas include:

Claiming routine product development as R&D
Weak technical uncertainty explanation
No clear baseline of existing knowledge
Overclaiming commercial recipe changes
Claiming taste preference as technical uncertainty
Poor records of failed trials
Incorrect subcontractor treatment
White-label or client-funded work treated incorrectly
No competent professional input
Failing to separate qualifying and non-qualifying work
Generic sustainability claims
Unclear project boundaries

InnoFund helps food and beverage companies prepare claims that are clear, compliant and evidence-led. We focus on the technical work behind the product or process, the uncertainty faced, the trials carried out and the costs directly connected to qualifying activity.

Assess your project

Can food and beverage companies claim R&D Tax Credits?

Yes. Food and beverage companies can claim R&D Tax Credits where they are seeking an advance in science or technology and have to overcome technical uncertainty. This may include work involving formulations, ingredients, shelf life, food safety, manufacturing processes, packaging, automation, brewing, distilling or bakery development.

Does new product development qualify for R&D?

New product development may qualify where the business is solving a technical problem, not simply creating a new flavour, menu item or product range. For example, developing a vegan, gluten-free, allergen-free, low-sugar or long-life product may qualify if the business has to overcome uncertainty around taste, texture, stability, safety or production.

Can ingredient substitution qualify for R&D Tax Credits?

Yes. Ingredient substitution can qualify where the change creates technical uncertainty. This may include replacing allergens, artificial ingredients, preservatives, sugar, salt, fat or animal-derived ingredients while maintaining structure, flavour, mouthfeel, shelf life or production consistency.

Can breweries and distilleries claim R&D Tax Credits?

Yes. Breweries and distilleries may qualify where they are developing new fermentation methods, yeast behaviour, alcohol-free or low-alcohol products, carbonation stability, packaging processes, flavour profiles or production methods. Routine brewing or distilling using known methods is unlikely to qualify on its own.

Can bakeries claim R&D Tax Credits?

Yes. Bakeries may qualify where they are resolving technical uncertainty around dough structure, rise, bake time, moisture retention, shelf life, allergen-free recipes, gluten-free products, natural preservatives, packaging or production consistency.

Can white-label or contract manufacturers claim R&D?

Possibly, but this is a key risk area. Where the final deliverable is a product for a client, the R&D may be treated as funded or subcontracted depending on the contract and scheme rules. The contractual position should be reviewed carefully before deciding who can claim and how the project should be treated.

Your next step

Don't guess. Know for sure.

Got a project you want to discuss? InnoFund helps separate routine delivery from genuine R&D so that claims are accurate, compliant and properly evidenced. Speak to our innovation funding experts today.

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Innovation in Food & Beverage

Food & Beverage R&D Claims Need to Separate Product Development from Technical Uncertainty

Eligible R&D Costs for Food & Beverage Businesses

HMRC Risk Areas for Food & Beverage R&D Claims

Patent Box & Knowledge Development Box

Capital Allowances & Land Relief

HMRC & Revenue Support

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