Umbrella Company: Expenses Policy

This guide provides details on the expenses that can be claimed through our umbrella company.

Please follow this guide carefully, and, wherever possible, obtain a receipt for the expense. If these guidelines are not followed, individuals may be separately assessed and found liable for tax on any taxable benefits. However, we will be checking all claims to ensure that only allowable expenses are reimbursed. In general, for an expense to be allowable, it must be incurred wholly, necessarily and exclusively in the performance of your duties. If you are in any doubt as to whether an expense will be allowable or not, please contact our office.

Travel and Subsistence - 24 Month Rule

Before travel, subsistence and mileage expenses will be allowable as a deduction against tax, the place of work must qualify as a temporary workplace. If you only work on a single assignment, without the anticipation that there will be further assignments, your workplace will be regarded as permanent for these expense types and they will not be allowable against tax. 

If you are travelling from home to your contract then this is subject to the ‘24 month rule’. This states that travel from home to work is only allowable as a tax-deductible expense for as long as you believe your contract will not exceed 24 months. For example, you have a contract for seven months that is renewed again and again. If you have your contract renewed for a third time then you would come under the 24 month rule and AT THAT POINT (21 months with your client) the travel expenses from home to work cease to become tax deductible. For any new contracts there will need to be a sufficient difference in travel distance from your first contract e.g opposite direction, or at least 10 mile difference. Without a significant change in journey the mileage expense will not be allowed. Where you fall outside the ‘24 month rule’, then travel between your home, or any other place that is not a workplace, is not allowable.

Unreceipted Expenses

Subsistence

Where you are unable to obtain a receipt and you are working at a temporary workplace but are not staying overnight, then a meal allowance can be claimed on the following basis:

• Up to £6.50 per day for breakfast if you leave home for work before 6.30am.
• Up to £6.50 if you work more than 5 hours a day but less than 10 hours a day (excluding breaks and travel time).
• Up to £14 if your work and travel time comes to more than 10 hours a day (excluding breaks).

Accommodation

Where you are unable to obtain a receipt, an allowance will be paid in respect of accommodation, meals and incidental subsistence costs, at the following rates:

• Up to £45 per night when staying within the UK and Eire but outside the M25
• Up to £55 per night when staying within the M25
• Up to £65 per night when staying outside the UK and Eire.

*We do recommend that you keep all receipts for evidence just incase you are asked to provide proof to HMRC that you incurred the expense

Mileage

Mileage can be claimed for business related travel including to and from your home to your place of work, the car must be insured for Business use and will be subject to the 24 month rule above. The following rates are applicable.

(A spreadsheet is available to help with claiming this expense and recording your start place and end place for each journey - please contact this office if you require this.)

Receipted Expenses

Subsistence

When you are staying away from home, you can claim for the cost of a receipted evening meal (c. £15 - £26).
Meals can also be claimed where your work takes you away from home over a ‘normal’ meal time.For example, if you have to work or travel until 9p.m., you could then claim the cost of an evening meal.

Accommodation

When you need to work away from home because of your contract, you can claim for the cost of the accommodation and breakfast, supported by receipts subject to the following limits

• £150 per night staying within the M25
• £120 per night outside the M25
• £200 per night outside the UK and Eire

Where you have receipted expenditure on accommodation, an un-receipted Allowance may be paidin respect of meals and other incidental expenses at the following rates:

• Up to £20 per night when staying within the UK and Eire or
• Up to £30 per night when staying outside the UK and Eire.

Incidentals

The maximum cost of incidental expenses of £5 per day in the UK and £10 per day if overseas can be claimed, for each evening that you have to stay away from home. This is to cover costs such as laundry, personal telephone calls and newspapers. Receipts for these do not have to be provided, but this is not a round sum allowance. Expenses in this category should be separately identified as incidental expenses.

Rented Accommodation

Where the accommodation is rented, then the cost (including gas, electricity, council tax, but excluding water rates) can be reclaimed provided that you maintain and continue payment for a main residence elsewhere in the UK, to which you return each weekend. A copy of the rental agreement and receipts for the payment of the rent must accompany the claim. Where you do not return to your main residence at weekends, then you can only claim 5/7 of the cost of the rental accommodation each week.

Friends or Family

Where you are staying with friends or family, you can claim £25 per night (no other allowances to be claimed) as a friends and family allowance. You will need to provide us with name, address and tel. number of the place where you are staying and the relevant date.

Rail, Bus, Parking and Air travel

Rail, Bus and air travel to your place of work can be claimed, but receipts are required.
Parking costs can also be claimed at the most economic rate. Again receipts are required.

Telephone

Only the cost of business calls on your private telecommunication system may be claimed. This includes mobiles and Internet access. Where a separate telecommunication system is used exclusively for business purposes, then the full cost of this may be claimed (including rental/standing charges).

Subscriptions

Those that are necessary for you to gain and maintain your professional standing are allowable. e.g. to professional bodies. For a list of allowable professional subscriptions, please visit www.hmrc.gov.uk/list3/list3.pdf

Stationery and books

Where these are used wholly, necessarily and exclusively in the performance of your duties then they are allowable. Receipts must be provided.

Eyesight Test

Where an eyesight test is necessary for the initial or continued use of visual display equipment on your assignment, then a claim of up to £15 towards the cost of the eyesight test can be made. A receipt must be provided from a qualified optician.

Computer Hardware and Software

Computer hardware and software are allowable where it can be proved they are essential for your job. A maximum of £500 per annum. can be claimed. We will require a receipt for the full amountof the costs, even if the receipt is for over £500.

Training

Only certain types of training are tax deductible. For training to qualify as tax deductible it has to be undertaken as necessary for you to complete in order to continue your work for the company. If the training is undertaken to progress your career or improve your skills then this would not qualify as it is considered to be a personal benefit (under a contract that is within IR35, this can not be claimed).

Expenses for International Contractors

The following outlines the additional expenses that are solely allowed to clients as international contractors that register with Danbro Ltd before they enter the UK. Please also note:

1) Receipts will be required to offset expenses such as flights.  2) The contractor must be non UK domiciled (i.e. a person whose country of residence is not normally in the UK), and must not have a history of UK residence during the two tax years before the tax year of arrival.

Relocation Costs

These costs relate to you relocating to the UK to take up a temporary contract. The maximum amount you are allowed to claim for relocation is £8,000. 

Expenses and benefits that may qualify are as follows:

Costs of disposing of your existing home
Costs of acquiring a new home
Costs of moving household furniture
Travel and subsistence costs
Costs of replacing domestic goodsBringing loans

A full list of expenses can be found here

Travel

You are eligible to claim for travel to and from your home country, including your flights between your home country and the UK for the first five years. Travel expenses of your spouse/civil partner and children under 18 when accompanying or visiting you, for up to two trips a year, are also eligible for a five year period

All other expenses in this policy are applicable, as long as the place of work is a temporary workplace and expenses are incurred wholly, necessarily and exclusively in the performance of your duties.