How to allocate staff time in an R&D tax claim
When preparing an R&D tax claim, one of the most important – and often most scrutinised – aspects is how you allocate your team’s time. HMRC expects a fair, consistent, and reasonable approach to apportioning time spent on qualifying R&D activity.
This guide outlines how to do just that – from understanding what activities qualify, to what evidence you need to support your calculations.
Which staff members can be included?
You can include employees and directors whose time is spent directly or indirectly supporting qualifying R&D activity. This doesn’t mean they need to work on R&D full-time – but only the time spent on eligible activity should be claimed.
It's essential to identify:
- Who was involved in your R&D project(s)
- What specific work they did
- How much of their time related to qualifying activity
What types of activity qualify?
Staff time can be broken down into two broad categories:
- Qualifying direct activities – This includes hands-on R&D work such as designing experiments, developing prototypes, or solving technical challenges.
- Qualifying indirect activities (QIAs) – These are activities that directly support the R&D process, like project management, feasibility studies, or maintaining R&D-specific equipment. These must still be closely connected to the core R&D.
Administrative tasks like payroll, HR, or routine maintenance are not eligible.
A qualified advisor can help ensure nothing is missed or incorrectly included.
How should I allocate time for each person?
There’s no one-size-fits-all. Time should be allocated based on each individual’s actual involvement in the R&D project(s).
This means:
- Different employees will have different apportionments.
- The same employee may have different allocations across different claim periods.
- Estimations should be based on reasonable and consistent methods – supported by records where possible.
What records should I keep?
While there are currently no strict requirements, HMRC expects you to be able to justify how you arrived at your figures. Ideally, this includes:
- Timesheets or project time logs
- Meeting notes or project schedules
- Job descriptions or work breakdowns
- Test or development documentation
For first-time claimants, HMRC may be more lenient, but accuracy and transparency are always expected.
Key takeaway
HMRC doesn't expect perfection – but it does expect a justifiable and well-thought-out approach. The more detail you can provide, the more robust your claim will be. Regularly reviewing and updating your approach ensures your claim stays compliant and maximises your entitlement.
If you’re unsure, our team can help guide you through the process and ensure every eligible hour is accounted for.
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