Is Your Nutrition and Wellness R&D Eligible for Tax Relief?

Insights - October 2018

 

The health and wellness landscape in the UK is constantly evolving in the face of profound challenges – an aging population, a rise in chronic long-term conditions and increasing financial pressure on the NHS. But as any successful business knows, challenges pave the way for opportunity and new technology is providing interventions to foster good health, increase personal fitness and prevent illness. In short, wellness movement is more popular than ever and its ability to innovate is at the heart of this.

As you will know, to remain ahead of the game nutrition and wellness companies need a consistent income stream to fund the research and development necessary before products come to market. As an SME this funding is increasingly difficult to secure but R&D Tax Relief can provide vital capital when you need it most – to turn the sector’s challenges into profit-making opportunities.

 

What are R&D tax credits?

R&D tax credits provide a cash benefit against tax due on a business’s research and development. The scheme was started by the UK government in 2000 to stimulate growth and innovation in UK businesses and to help small businesses afford the cost of research projects.

As long as your business and your project meet the eligibility criteria you can claim tax relief for a range of costs related to your R&D activities including employee time, consultancy fees and items consumed in the pursuit of your R&D.

 

Is my Company eligible?

Small businesses with a workforce of less than 500 are eligible to access R&D Tax Credits to obtain an effective cost reduction of up to 26%. Additionally, businesses operating at a loss can choose to surrender their deficit for a payable tax credit at 14.5%. This means that a business making a large loss could receive a cash payment of up to 33p for every £1 spent on eligible research.

The R&D Expenditure Credit (RDEC) allows larger businesses to claim up to 8.8% of eligible expenses, directly reducing corporate tax liability. Any businesses not covered by the SME definition may be eligible to apply and as with the SME Tax Relief Scheme, companies can claim for both successful and unsuccessful research and development initiatives across any sector.

 

Is my project eligible?

For both schemes, eligible R&D can include:

“the creation or improvement of a product, procedure, process, program or equipment; and demonstrating originality or substantial improvement.”

In other words, if you can answer yes to any of the points below, your project will likely be eligible:

• Your R&D project is technical or scientific in nature
• Your project involves experimentation on new or existing processes or products
• Your project is about new ways to do existing tasks (the level of new innovation needs to be proven).

What types of projects are R&D tax credits used for?

There are many areas of nutritional science that demand constant research and development. The rise in obesity levels in the UK, along with heightened public awareness of wellness and nutrition

 

Naturality

In line with the demand for natural approaches to health and wellness, organic food and drink has become the default option for many people. As a result, more and more companies are looking into how to make their food as natural and healthy as possible. As businesses turn their attention to ‘going organic’, new incubation, growing and preservation techniques are being developed. Projects that contribute towards research and innovation in this field are common recipients of R&D tax credits.

 

Fruit and vegetables

The link between fruit and vegetables and good health is not new, but harnessing the properties of this produce and applying it to new industries is at the forefront of nutritional science innovation. Sports recovery, mental health, pain management and even skincare are all areas using the beneficial properties of fruit and vegetables in new way. As sports science, medicine and the beauty industry (amongst many others) continue to innovate in this field, the potential that their work is eligible for R&D Tax Relief only increases.

 

Functionality

Consumers are increasingly looking to diversify the functionality of food so it can bring them benefits other than basic nutrition. Functional foods do more than fill an empty stomach; they improve brain power, enhance sporting prowess, increase lifespan and prevent cancer. The list of capabilities of foods is endless – and the industry requires constant research to prove the link between food and these benefits – R&D Tax credits can bridge the funding gap.

 

Next steps

If you work in any of these fields, tax relief on your research projects could be the catalyst that leads to your latest innovation. So, if you have a nutritional science project that could be classed as R&D, make sure you document everything to prove your eligibility – and start claiming the relief you’re entitled to with F-Initiatives.

For an informal chat on how you can claim R&D Tax Credits please contact F. Initiatives on 0207 653 1921 or email contact@f-initiatives.uk

R&D Tax Credits Advisors. R&D Tax Credits Experts.