Contractor Expenses using an Umbrella Company
By claiming all appropriate allowances and expenses you can minimise your tax bill; however, this is not a way of avoiding tax.
Obviously receipts should be kept for all the expenses that you claim. Remember it is you the Revenue will investigate and not your umbrella company, be very cautious of companies who say you do not need to keep receipts and can claim for things you have never actually bought.
If you can't prove it, the Revenue will view it as tax avoidance.
Please find below a summarised list of commonly claimed legitimate expenses.
For a full and comprehensive list of what you can claim using an umbrella company click here or speak to one of ContractorUmbrella’s specialist account managers on 01206 713680, they are always more than happy to answer any question you have.
Alternatively, click here to read SJD's Guide to Expenses for contractors choosing to work through their own limited company.
Travel
You can claim the cost of travel to and from your temporary place of work. This allowance is to cover fuel and running costs of the vehicle. You can also claim for parking and congestion charges.
Food and drink and lunch claims
Despite what you may have read or heard you cannot claim for the cost of lunches taken as part of your normal working day as this is not an expense incurred ‘wholly and exclusively for business purposes’ since everyone must eat in order to live, whether they are a contractor or permanent employee.
Accommodation
The cost of hotel or bed and breakfast accommodation can be claimed as an expense as can the reasonable cost of additional meals taken in conjunction with overnight accommodation. There are no set allowances for accommodation but the cost must be deemed to be 'reasonable'; this also applies to the cost of meals.
Equipment
Claims for equipment must be supported by evidence that they are specifically required for your current contract and that the equipment is wholly necessary for you to perform the assignment. Any general pieces of equipment for your role as a contractor or ‘nice to haves’ are not permitted by the Inland Revenue.
To Summarise
If the Inland Revenue decides to investigate you, you must have receipts to prove you made the original purchase, only claim for expenses you have actually incurred.
Click on the links below to read our other umbrella guides:
SJD Accountancy provides Umbrella Company Services to contractors and freelancers through it's sister company ContractorUmbrella.
ContractorUmbrella Ltd
ContractorUmbrella is part of the SJD Accountancy group and was formed in 2002 to provide employment services to UK based contractors who do not wish to operate through their own Limited company.
They are also the first umbrella company to be fully compliant with all Managed Service Company (MSC) and debt transfer legislation, as reviewed by KPMG. This is important as many other umbrella companies claim to be HMRC compliant - but can they prove it? ContractorUmbrella can, read KPMG's review.
ContractorUmbrella is an alliance partner of Contractor UK, Contractor Money, FreelanceUK and is an associate member of the Professional Contractors Group.
They offer:
- Low weekly/monthly fixed fees
- NO entry or exit fees
- Money backed service guarantees
- No voice mail or automated call handling - all calls are answered by real people and within three rings.
Unlike other Employment Service Companies and Umbrella Companies they will not take a percentage of your income, their weekly or monthly fees remain the same regardless of your earnings. For the duration of each contract you will be guaranteed a payment from them regardless of whether they have received funds from your agency/client - this is a unique service within our industry.
If you choose to use ContractorUmbrella, but then wish to convert to a Limited Company at any time ContractorUmbrella will arrange this for you quickly and easily.
If you have any questions about ContractorUmbrella or using an umbrella companies please call 01206 713680, e-mail info@contractorumbrella.com or visit www.contractorumbrella.com
SJD Accountancy
SJD Accountancy is the UK's largest specialist provider of fixed fee, limited company accountancy services to contractors and freelancers. SJD have been acting for contractors across the UK since 1992, have more than 8,500 clients; are the only National specialist firm of accountants with offices in all major cities; are the most recommended accountancy firm on the internet and have more qualified staff than any other specialist firm with qualifications from the following major Tax and Accountancy bodies - ATII, ATT, ACCA, CA, ACA, FCCA, ACMA.
SJD have also won every relevant award possible, including: the Accountancy Age Award for Excellence in 2007 and 2004, Contractor uk 'Best Contractor Accountant' for the last two years, Sunday Times 'Best company to work for'; are a Quality Accountant as recommended by the Professional Contractors Group (PCG) and are recommended by the Sunday Times.
If you have any questions about contracting through your own limited company or would like any further advice please call our New Client Services Team on 0500 152 500 / 01442 232700 or e-mail leanne@sjdaccountancy.com
