One of the biggest advantages of working under an Umbrella Company is that you can claim for your expenses which you can then offset against your tax bill. This enables you to obtain tax and NIC relief for these expenses, maximising your total earnings overall.
The Golden rule for claiming expenses
"Expenses must be incurred wholly, exclusively and necessarily in the performance of your duties"
What can be claimed?
As long as you follow the rule above, you can"t go far wrong. Expenses must be only be claimed for the costs you incur as a result of the work you do. Some of these can be claimed before taxes are applied i.e. they are "tax deductable".
The main expenses you can legitimately claim for as an umbrella company contractor
1.Mileage "" You are allowed to claim mileage if you use your own vehicle for travelling to work. You must provide the destination of the journey, reason and VAT fuel receipts. As a rule of thumb a receipt for 13 will be sufficient for every 100 miles travelled. Mileage can be claimed at different rates according to what you use for travel (see below). The mileage allowance is also deigned to cover costs of vehicle maintenance, insurance, servicing, tyres & spare parts.
Car & Van - 40p per mile.
Motorcycle - 24p per mile.
Bicycle - 20p per mile.
2.Travel "" As an umbrella company contractor you can also claim for other travel expenses such as, parking tickets, plane tickets, congestion charges etc. However receipts must be provided in order to claim these and you must be able to prove they were necessary for your work.
3.Meals "" You are also allowed to claim for the meals you have had while away from home and working. For over 5 hours away from home you will be able to claim up to 7.50 for receipted meals. For 10 hours home you will be able to claim up to 15 for meals. Again receipts must be provided.
4.Accommodation "" You can claim for accommodation if you are staying away from home due to work. Again we must have a receipt that includes the hotel/B&B's name, address and telephone number (preferably a VAT-registered business with the receipt supplied on headed paper).
5.Tools/Clothing "" As a contractor use you are allowed to claim for the tools & clothing you might use performing your duties. Again receipts must be provided for these items and they must be solely for the purposes of your job.
6.Telephone "" You are allowed to claim for business calls incurred as part of your contract. These must be highlighted on your bill and sent to your umbrella company.
7.Professional Associations "" Fees and subscriptions to any professional bodies required as part of your contract work may also be claimed.
8.Agency Expenses "" You can also claim back any agency and umbrella company expenses incurred.
Umbrella company dispensation?
Certain expenses won"t require receipts however it is essential that others do. Employers can apply to HMRC for dispensation in order to avoid reporting expenses paid to employees on form P11D. The aim of dispensation is to minimise the amount of administration and paperwork that Contractor Accountants will have to carry out. At Danbro we still recommend that contractors keep hold of receipts even if the umbrella company does not require them, as HMRC can still request for evidence to ensure expense claims are genuine.
If you are ensure it"s always best to seek advice from your umbrella company that will be able to provide you with an expenses policy and talk you through what can be claimed.
For further details, please contact Danbro on: 01253 600141,
General Enquiries: 01253 600140,
London Office: 020 7836 8400 or
E-Mail: [email protected]
The Golden rule for claiming expenses
"Expenses must be incurred wholly, exclusively and necessarily in the performance of your duties"
What can be claimed?
As long as you follow the rule above, you can"t go far wrong. Expenses must be only be claimed for the costs you incur as a result of the work you do. Some of these can be claimed before taxes are applied i.e. they are "tax deductable".
The main expenses you can legitimately claim for as an umbrella company contractor
1.Mileage "" You are allowed to claim mileage if you use your own vehicle for travelling to work. You must provide the destination of the journey, reason and VAT fuel receipts. As a rule of thumb a receipt for 13 will be sufficient for every 100 miles travelled. Mileage can be claimed at different rates according to what you use for travel (see below). The mileage allowance is also deigned to cover costs of vehicle maintenance, insurance, servicing, tyres & spare parts.
Car & Van - 40p per mile.
Motorcycle - 24p per mile.
Bicycle - 20p per mile.
2.Travel "" As an umbrella company contractor you can also claim for other travel expenses such as, parking tickets, plane tickets, congestion charges etc. However receipts must be provided in order to claim these and you must be able to prove they were necessary for your work.
3.Meals "" You are also allowed to claim for the meals you have had while away from home and working. For over 5 hours away from home you will be able to claim up to 7.50 for receipted meals. For 10 hours home you will be able to claim up to 15 for meals. Again receipts must be provided.
4.Accommodation "" You can claim for accommodation if you are staying away from home due to work. Again we must have a receipt that includes the hotel/B&B's name, address and telephone number (preferably a VAT-registered business with the receipt supplied on headed paper).
5.Tools/Clothing "" As a contractor use you are allowed to claim for the tools & clothing you might use performing your duties. Again receipts must be provided for these items and they must be solely for the purposes of your job.
6.Telephone "" You are allowed to claim for business calls incurred as part of your contract. These must be highlighted on your bill and sent to your umbrella company.
7.Professional Associations "" Fees and subscriptions to any professional bodies required as part of your contract work may also be claimed.
8.Agency Expenses "" You can also claim back any agency and umbrella company expenses incurred.
Umbrella company dispensation?
Certain expenses won"t require receipts however it is essential that others do. Employers can apply to HMRC for dispensation in order to avoid reporting expenses paid to employees on form P11D. The aim of dispensation is to minimise the amount of administration and paperwork that Contractor Accountants will have to carry out. At Danbro we still recommend that contractors keep hold of receipts even if the umbrella company does not require them, as HMRC can still request for evidence to ensure expense claims are genuine.
If you are ensure it"s always best to seek advice from your umbrella company that will be able to provide you with an expenses policy and talk you through what can be claimed.
For further details, please contact Danbro on: 01253 600141,
General Enquiries: 01253 600140,
London Office: 020 7836 8400 or
E-Mail: [email protected]
Source...