Quick answer: Apportionment is how a cost or a time period is split between the portion that qualifies for R&D tax relief and the portion that does not, using a method HMRC considers just and reasonable, such as timesheets or documented usage estimates. It applies to staff time, consumables, and periods that straddle a scheme change.
What is apportionment?
Apportionment, in the R&D tax relief context, is the allocation of costs or time between qualifying and non-qualifying categories. It applies where an employee splits time between R&D and non-R&D work, where consumable items are partly used in a qualifying project, or where an accounting period straddles a legislative change such as the 1 April 2024 move to the merged scheme. The apportionment method must be just and reasonable and supported by contemporaneous evidence.
How does HMRC define apportionment for R&D claims?
HMRC's position on apportionment is set out across CIRD83000 for staff costs, CIRD82300 for consumables and CIRD81160 in relation to straddling periods. HMRC accepts a range of methods including timesheets, project codes, reasonable estimates supported by diaries, and engineering-derived usage figures for consumables. The approach must be consistent year on year and the underlying evidence must be retained.
What does apportionment look like in practice?
An engineer spends an estimated 60% of a given year on a qualifying R&D project and 40% on routine production support. With contemporaneous timesheet evidence, the staff cost apportioned to the R&D claim is 60% of the relevant salary, employer National Insurance and pension contribution. The remaining 40% is outside the claim. If you want to see how apportioned staff costs affect the total claim value, the free eligibility calculator can give you an indicative range.
Related terms
Frequently asked questions
Apportionment is the process of splitting a cost, or a period of time, between the share that relates to qualifying R&D work and the share that does not, so that only the qualifying share is included in the claim.
HMRC accepts a range of methods including timesheets, project codes, reasonable estimates supported by diaries, and engineering-derived usage figures for consumables, provided the method is applied consistently and the underlying evidence is retained. See CIRD83000 for staff costs and CIRD82300 for consumables.
No. Apportionment applies wherever a cost or period is only partly attributable to qualifying R&D, including staff time split between R&D and non-R&D work, consumable items used partly in a qualifying project, and accounting periods that straddle a legislative change such as the 1 April 2024 move to the merged scheme.
HMRC expects apportionment to be backed by contemporaneous evidence such as timesheets or diaries. Without this, HMRC may challenge the apportioned figure during a compliance check, so a defensible method and retained records reduce the risk of an adjustment.