Contact us

R&D tax credits for the manufacturing and food industries

Manufacturers benefit from the highest average R&D claim value. Their R&D activity stretches from product development, production line speed and resource improvement, quality control and compliance. Each incremental challenge and solution sought can qualify as R&D.

11,090

claims

£2,235

millions in claim value

£201,533

Average claim value

Source HMRC R&D tax credits statistics 2026

The statistics published by HMRC for 2024-25 are provisional and have been uplifted to include estimates for claims not yet received.

What qualifies as R&D in the manufacturing sector?

Generally we see manufacturers:

  • Developing new processes to scale up to make larger volumes
  • Small batch trials and may involve a pilot to investigate a concept or new process.
  • Trial and test materials, components, substances, chemicals, non-routine prototypes, methods or techniques.
  • Streamlining manufacturing processes through automation.
  • Improvements to product packaging can also qualify as R&D if they represent a functional improvement, not just a design feature.

R&D can also come in the transfer of existing technology or adaptation of new technologies from other industries for novel applications to improve manufacturing processes or products.

R&D tax credits for food and drink manufacturers

Taking, for example, the food and drink sector, we find qualifying R&D expenditure in activities like:

  • Increasing shelf life
  • Product reformulation to reduce or increase sugar or alcohol content without impairing flavour.
  • Packaging innovation including development of new or improved bottling or canning processes.
  • Regulatory or quality improvement to the health and nutritional profile of food and drink products, often to meet current legislation in non-routine ways.

Non-qualifying R&D activities include:

  • Routine recipe changes
  • Cosmetic packaging, etc

This sector includes the following types of business.

  • Manufacture of food products including dairy and bakery
  • Manufacture of beverages – including brewing and distillery
  • Manufacture of chemicals and chemical products
  • Manufacture of electrical equipment
  • Manufacture of motor vehicles

Yes, manufacturing companies that have already claimed R&D tax credits might find that they could claim even more by applying for corporate tax relief under the Patent Box scheme. In 2024-25, so far, 1,045 companies elected into Patent Box, claiming £819 million in benefit.

A company can claim against certain costs that are allowable for tax purposes on the project including:

  • Employment costs to the company including salaries, bonuses, some reimbursed costs, employers Class 1 National Insurance contributions, employers pension fund contributions
  • Subcontractor costs (certain restrictions apply if you are claiming under the RDEC scheme)
  • Externally Provided Workers (EPWs)
  • Software (revenue costs)
  • Consumable items including materials and utilities like light and heat
  • Clinical trials volunteers in the pharmaceutical industry
  • Data licenses
  • Cloud computing

Find out more about the merged RDEC and ERIS schemes.

Manufacturing and food industries sector business

FMCG and scale manufacturing

read more

Precision technology

read more

Contact us
to find out how you can make the most of your innovation

01727 738600
Contact us

Portals | Login

Contact us
01727 738600