Using an umbrella company gives you the opportunity to claim back business related expenses. That’s the simple bit. What people sometimes find confusing is exactly which expenses they can claim and which they can’t.
People often assume that managing your expenses is a minefield but it doesn’t have to be. Hopefully this guide to what you can and can’t submit as “allowable” expenses will help.
The important thing to remember is that it is your responsibility to make sure you are only claiming for ‘allowable’ expenses. If you claim for things that don’t relate directly to your work you could end up with a hefty tax bill. Anything you claim for must be a cost that you have incurred as a direct result of working on your current assignment or contract
Here’s a quick overview.
Travel
Travel costs incurred getting to and from a temporary place of work. You can claim 45p a mile for the first 10,000 miles in a tax year and 25p thereafter or if you’re a motorcyclist 24p a mile. You can claim for parking costs as well as congestion charges or tolls but unsurprisingly not for parking fines! Interestingly you can also claim mileage (20p a mile) if you cycle to your temporary place of work and don’t have any fuel costs!
You can also claim for public transport to and from an office, site or any other destination you are required to travel to for your work.
Accommodation
If you are working away from home on a temporary basis (or are away for training) you can claim reasonable accommodation costs as expenses. You will need receipts showing the cost of your B&B or Hotel.
Food
If you are working away you can claim for ‘reasonable’ meals costs added to your hotel or B&B bill. You can’t claim for meals which you would classify as corporate hospitality or entertaining prospective clients.
Personal Incidental Expenses (PIEs)
For incidental overnight expenses such as the cost of a morning newspaper or telephone calls home, wi-fi charges etc. You can claim up to £5 per night if you are working in the UK and up to £10 per night outside the UK.
Clothing
Any specialist clothing required, such as high visibility vests and jackets or hard hats. Be careful though, you can’t claim for anything that could be described as standard clothing so if you need a suit for work, even if you would never dream of donning a shirt and tie away from work, it is not classed as an allowable expense.
Equipment
You can claim for equipment but again only if it is directly required for your current contract and is wholly used for your work. So a mobile used exclusively for the job you are working on would count but it wouldn’t if you used it for personal calls.
CPD or Training
You can claim for the cost of training courses as long as they relate directly to the assignment or contract that you are currently undertaking. For example if a specific Health and Safety qualification was required to enable you to carry out your current role the cost of that would be allowable however if you wanted to do a course to enable you to progress in your career or to change direction then that wouldn’t.
You can claim for the subscriptions or membership of professional bodies, again these must be directly relevant to the work you are undertaking at the time.
Eye tests
You can claim for these, and for glasses or contacts, if your everyday work involves working on a PC or laptop.
Pensions
Payments made in to a pension scheme are tax deductible. You pension payments are deducted by us pre-tax so increasing your pension contributions can be highly tax efficient.
If in doubt speak to one of our advisors on 01244 500195
