Corporation Tax Act 2009 section 1124

Staffing costs: attributable expenditure

Section 1124 sets out the rules for determining which staffing costs can be attributed to relevant research and development for the purposes of R&D tax relief.

• Staffing costs attributable to R&D are those paid to, or in respect of, directors or employees who are directly and actively engaged in the relevant research and development
• Where a director or employee splits their time between R&D and other duties, only the appropriate proportion of their staffing costs is treated as attributable to R&D
• Persons providing support services such as secretarial or administrative work are not treated as being directly and actively engaged in the R&D activities they support
• The "appropriate proportion" test applies where the split of time or effort is objectively measurable, as distinct from a "just and reasonable" apportionment used elsewhere in the legislation for more subjective assessments