How to claim expenses when running as an employee of an Umbrella Company.
Claiming expenses as an employee of an Umbrella Company
Since April 2016 expenses claimed by employees of Umbrella Companies that are under supervision, direction and control (“SDC”) have been restricted to expenses that any permanent full time worker would ordinarily be able to claim. Permanent employees are, for instance, unable to claim the costs of ordinary commuting or meals purchased while at work. In brief, an umbrella company employee can only claim chargeable expenses that the end client is able to and has agreed to pay over and above your agreed rate pf pay, in line with HMRC guidelines.
Supervision refers to operating underneath a manager, supervisor or another individual with the authority to oversee your daily work. This also applies to anybody with the authority to take disciplinary action against you and even working in an environment where you receive guidance or assistance from colleagues.
Direction refers to instructions as to how you carry out your work. Anybody given guidance as to the manner in which they work is considered to be under direction.
Control refers to another person having the authority to dictate what you do at any given point during your working day. If you can be moved to another task or site, or told to work on something else, you’re considered to be under control.
However expenditure incurred solely for the purposes of your work can still be claimed on a tax return or form P87 (if less than £2,500) through HMRC – for example, if you’re required to purchase tools, uniform or equipment in order to work, you can still claim tax relief on these at the end of the year even if your engager won’t cover the cost. Our sister company Elver Consultancy offers a Self Assesment tax return service, for Elver Umbrella Services employees.
Please ensure that claims are submitted in line with this policy as claims may otherwise be rejected. To claim expenses you must remember to complete an ‘Expense Claim Form’ on a weekly basis and attach all necessary receipts. Our Expenses Team will then process and validate legitimate expenditure and may need to contact you if more information is required.
What expenses can I claim?
Chargeable mileage, training, parking and subsistence are reimbursed via our payroll throughout the duration of your employment. Other, non chargeable, expenses are not re-imbursed and must be claimed either on a form P87 or (if greater than £2,500) on a self assessment tax return. The examples below of expenses that can be “claimed” refers to both chargeable and non chargeable expenses
Receipts should be attached to all claim forms for expenditure where it would be reasonable to expect that you would have received one.
- Use of own vehicle
Tax relief is not normally available on travel costs relating to commuting to and from your normal place of work. However, where you are to work at different worksites from your normal place of work it will be possible to claim mileage expenses.
If you are under the SDC of your end client and you expect only to work at a single location throughout your time as an employee of Elver Umbrella Services, this location will be regarded as a permanent workplace and expenses will not be allowable. If your assignment is outside IR35 it may still be possible to claim for travel expenses to that site subject to the temporary work site rule, explained below.
HMRC specifies that travel to and from a temporary work site is an allowable expense. A worksite qualifies as temporary if the period of time at the site is both expected to be:
- less than 24 months (including any time spent working on that site immediately prior to commencing your employment with Elver Umbrella Services), and
- in fact does not exceed 24 months.
If the contract is extended or is expected to be extended beyond 24 months, no further travel to and from the work site is allowable from the date of the extension as the work site would no longer qualify as temporary.
One exception to the above principle may arise where you spend 40% or less of your time at a workplace. If this is the case, all expenses incurred in travelling to and from that site are allowed, regardless of the temporary worksite rule. The claim may continue indefinitely for as long as circumstances continue to satisfy the 40% rule.
Travel expenses incurred on engagements that are outside the scope of IR35 or qualify under the 40% rule above are only chargeable and therefore re-imbursed by Elver Umbrella Services with the agreement of the end client.
You may claim a cost per mile for allowable business journeys in your own vehicle. The rates that may be claimed (which are with reference to the total business mileage done in a tax year and are in line with HMRC approved rates) are as follows:
|Type of Vehicle||First 10,000 miles||10,000+ miles|
|Car||45p per mile||25p per mile|
|Motorcycle||24p per mile||24p per mile|
|Bicycle||20p per mile||20 per mile|
Valid VAT receipts for fuel are required and must be sent with your claim. Please also let us know the fuel type and engine size of the vehicle on the claim form.
- Accommodation expenses when working away from home
If you are temporarily assigned to a workplace which is too far away to travel to from your home, then you can claim the cost of a hotel or bed and breakfast.
- Additional subsistence costs
If you need to purchase a meal as an additional expense when working outside your normal routine or when staying in a hotel or B&B whilst working away from home you can claim for this expense. You may also claim ‘personal incidental costs’ for outgoings which arises as a result of living away from home, although not necessarily in the course of your work, such as laundry costs, home telephone calls and newspapers. These can be claimed to a maximum of £5 a night for overnight stays in the UK.
- Protective clothing, tools and equipment
An employee is not normally able to claim the cost of work clothing, unless they are required to wear special protective or safety clothing such as helmets, boots, overalls or gloves. There are flat rates that be claimed for many trades and professions. These can be found here.
- Professional Subscriptions
If you are a member of a recognised professional body or society, then you may be able to claim the costs back if it is relevant to your current assignment. You can find a list of HMRC approved bodies here.
If the contract for your assignment requires you to have professional indemnity insurance, then you can claim the costs back as an expense.
- Working from home
If the terms of your assignment require you to work from home for some or part of the time, then you might be able to claim some of your household costs as expenses. This could include the additional costs of heating and lighting in your work area, business phone calls etc. You cannot claim relief on mortgage repayments, council tax, phone line rental or internet access (unless it is a new connection required for business purposes). You can claim £4 per week or £18 per month for household expenses without requiring receipts or proof of your outgoings.