R&D Tax Credits: How to Allocate Staff Involvement

Marketing Managers, Developers, Chief Operating Officers, James the intern who did a few days’ worth of testing that one time back in March – what is a reasonable percentage to allocate to each of these people for your R&D Tax Credits claim?

The Basics:

One important aspect of the R&D tax credit scheme involves figuring out and allocating a percentage of your staff’s yearly research and development involvement. If you are one of rare few who keep detailed time hourly timesheets of all of your employees, then congratulations – you are going to have an easier time with this, but for the rest of us, we must ask “how do you figure out how much time they spent on R&D?”

Before we get into specifics, it’s worth mentioning that HMRC are pragmatic enough to accept that not everyone is keeping these detailed timesheets and so they are willing to accept your best estimates provided you’ve done as much as you can to understand their individual involvement. Simply because someone is in sales doesn’t mean you have to write them off the R&D Tax Credits claim entirely; conversely, while the title “Senior executive vice-president developer-in-chief” may sound impressive, they may actually be on less than the maximum allowable percentage.

There is no “one size fits all” rule here, so if in doubt please contact your R&D tax credit consultants on the matter.  

Broadly speaking, there are two categories of qualifying R&D expenditure: direct and indirect.

Direct Qualifying Activities

Taken directly from the HMRC guidebook on R&D Tax Credits (CIRD), direct qualifying activities are: “the activities that directly contribute to achieving this advance in science or technology through the resolution of scientific or technological uncertainty.” -CIRD81900

Development Team

Let’s start with the obvious heavy hitters on the direct side: your development team. These are the people who are getting down and dirty with code, turning bugs into features, and trying their best to turn your vision into a usable product. It’s not uncommon to have the bulk of the development team in the 90-95%* range during the early growth stages of your business as the very nature of their work is the D in R&D.  As your company matures you may find that some of them do more routine maintenance on some of the products you had already released and as this is a non-claimable item, you may consider reducing their percentage. On the whole, this is one area of a business where we see the highest percentages.


Any time people spend on problem solving and product creation fit the direct qualifying activity description. Your Chief Technical Officer will usually have a higher percentage here as well.

Management and Directors

Anyone in the 50-75% range would include those who have a significant role to play in the development, but who also might have other roles within the organisation that do not qualify. Upper management and directors often have percentages in this range at the early stages of the business and may move to a more hands-off approach once other team members are set up properly.  Remember, you can’t include any commercial activity as R&D activity. Meeting with investors and having lunch with potential future customers are necessary for the business, but are not directly involved with advancing science or technology.


An interesting grey-zone exists if you have any of your team engaged in User Experience (UX) work. At GrantTree we take the approach that yes, this work is absolutely vital to the R&D to take place as much of the work done by the the UX team is fed back directly to the development team, however, there may be some of that time spent on market research and visual design. Depending on how much of their time was spent on aspects relating to an advancement of the fields of science or technology (requirements of the R&D tax credit scheme)  we could argue that anywhere from 30-70% of their time could be claimable.


Lower down on the list we have time spent on testing, which could be done by anyone and everyone on your team. For example, if you sell a bespoke CRM which requires one or more account managers, and these account managers speak with customers directly about issues they are having, and let your development team know what is working and what isn’t either – this usually qualifies. In this example we would list these people somewhere around 5-10%, but depending on the size of your business you may have people who do this as a full-time role. Adjust accordingly.

Indirect Qualifying Activities

Unlike direct qualifying activities, indirect qualifying activities are less targeted toward hard development and are more geared towards ancillary and support roles within an organisation.

On the higher end, any time spent managing and directing people involved in direct qualifying activities (such the the CTO leading the development team) would qualify. This includes meetings, time spent planning the scope of the projects, or time spent on preparation of the original report of R&D findings. We are hesitant to provide a range here as it could be as high as 95% or as low as 10% depending on how much time was spent during the year in question. If you are in doubt of what to put here, get in touch and we can advise you.

Marketing may have a part to play here, as feasibility studies undertaken inform the strategic direction of a specific R&D activity would also qualify. Furthermore, if you hired any researchers from a university or research lab who supported the R&D initiative (including data collection), this could also be time claimed for R&D Tax Credits purposes.

When going through the list of employees and determining which percentage to allocate, it is equally important to remove any time spent on non-R&D activities as you are not able to claim for this.

Hopefully you now have a better idea of what to assign your staff when it comes to R&D percentages. As you’ve probably guessed, it’s a fairly nuanced decision; if you are unsure, best to check with an R&D Tax Credit specialist to ensure nothing comes up as a red flag on HMRC’s radar and your claim will sail through the process.

*While you can allocate 100% of an employee’s time to R&D, we recommend allocating no more than 95% in your claim. Everyone needs a loo break, once in a while.