Definition
Time apportionment is the allocation of staff costs, and occasionally overheads, to qualifying research and development on the basis of the proportion of time spent on qualifying activity. For staff costs, time apportionment produces the fraction of time, which is applied to the relevant salary, employer NIC and pension to derive the qualifying cost. HMRC expects contemporaneous evidence where available but accepts supported estimates, provided the method is consistent and documented.
How HMRC defines it
HMRC guidance on time apportionment is at CIRD83000 and CIRD83200 of the CIRD Manual. The 2024 Guidelines for Compliance GfC3 sets out the documentation HMRC expects, including timesheets, project-time systems, diaries, line-manager sign-off and witness statements. Methods without any supporting evidence are usually rejected on enquiry.
Practical example
A software company uses Jira time-tracking data to record hours booked by project. The R&D project accounts for 2,400 hours of a team-wide total of 4,000 hours across the accounting period. The team's aggregate relevant staff costs of £300,000 are apportioned at 60%, giving qualifying staff costs of £180,000. The same Jira export acts as contemporaneous evidence in any HMRC review of the apportionment.