CIRD83000 - R&D tax relief: categories of qualifying expenditure: staffing costs


Only staffing costs attributable to relevant R&D can be qualifying expenditure. The directors or employees must be directly and actively involved in relevant R&D. Staffing costs in respect of clerical or administrative staff engaged in those activities are not qualifying expenditure. The measure of staffing costs is dealt with at CIRD83200.

Only staffing costs of the employees and directors of the company making the claim can be qualifying expenditure. Staffing costs of another company in the same group recharged to the company do not qualify as staffing expenses, although there may be a case that the recharge amounts to a payment for externally provided workers ( CIRD84000). Any such cases should be dealt with on their particular facts.

Directly and actively engaged

Whether an employee is directly and actively engaged in R&D is a question of fact based on the duties performed and not on the job title.

‘Directly and actively engaged’ refers to hands on work. Hands-on work performed by an employee includes:

  • preparing equipment and materials for experiments and analysis, but not maintaining equipment;
  • experimentation and analysis;
  • recording measurements, making calculations, and preparing charts and graphs of the results; and
  • performing work with respect to engineering or design, operations research, mathematical analysis, computer programming, data collection.

Supervisors and managers

Supervisors and managers performing tasks such as described above as hands-on are also directly and actively engaged. In addition, time they spend directing the technical course of, or providing direct technical input into, the ongoing R&D activities can be considered as direct engagement in R&D.

However, time they spend on non-technological management aspects of activities, such as long-term strategic planning, contract administration and other decision-making functions that do not directly influence the ongoing R&D activities, is not considered direct engagement in R&D.


Where a person has a contract of employment with a company they should generally be accepted as employees of that company.

Sometimes one group company may employ all the staff for the group, and recharge other group companies for their services. The fact that group claimant companies are recharged for the use of employees of another group company does not make this recharge into their own staffing expenditure, although the recharged expenditure may qualify for the claimant company as expenditure on externally provided workers ( CIRD84000), even though it does not qualify as expenditure on their own staffing costs.

Groups sometimes have one company operating the payrolls for all of the companies in the group, or use a payroll service. The fact that Company A may have its payroll operated by Company B does not mean that Company A’s employees are employees of company B. It also does not stop the PAYE and NIC in respect of the employees being Company A’s liability for the purposes of the cap on payable R&D credit ( CIRD90500).

The same meaning of staffing costs is adopted for the large company scheme by FA02/SCH12/PARA17 (b).