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.

All receipts should be kept for the expenses that you claim. If you claim expenses for things that you never actually bought or do not have receipts for and HM Revenue decide to investigate your accounts, your expenses would be disallowed and you would be liable for all the tax owing.

If you do not have receipts and you can’t prove it, the Revenue may view it as tax avoidance.

Click to view our directory of Umbrella Companies to see how they can help you manage your expenses.

Contractor Expenses

Below is a summarised list of commonly claimed legitimate expenses through umbrella companies:

Travel

You can claim the cost of travel to and from your temporary place of work. This allowance is to cover fuel, running costs of the vehicle, parking and congestion charges.

Food and drink and lunch claims

Contrary to popular belief you are not allowed to 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’ - everyone must eat in order to live whether they are a contractor or a permanent employee.

Accommodation

The cost of a 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. It is strongly advised that you only claim for expenses you have actually incurred.

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