These guidance notes summarise the types of expenses that may be claimed by a contractor working with an Umbrella company in order to perform his/her duties of employment. The rules from HMRC are very specific and here is a brief overview of some expenses allowed in performing employment duties:
It is always recommended to keep receipts and only claim the exact amount on the receipt. If you are uncertain as to whether to claim the expense, you should seek professional guidance or not claim the receipt at all.
Uniforms or Work Clothing
You are unable to claim the cost of ‘normal’ clothing however certain protective clothing which is required for you to perform your job duties (such as protective uniform) will generally be allowed as an expense.
Travel and Subsistence (Post April 2016)
As a general rule, travel and subsistence (including home to work travel) is no longer an allowable expense. The rules on travel and subsistence expenses changed effective 06 April 2016 which restricted tax relief on these expenses due to employees being under SDC (Supervision, Direction & Control). In certain instances such as site-site travel or certain care workers travel costs may still be allowable. Home to work travel would be disallowed.
VDU Eye Tests/Spectacles
If a contractor is required to use VDU equipment he/she may claim the cost of the examination (eye) test. Reasonable costs are typically reimbursed where the examination shows that a contractor requires corrective appliances with specific prescription to use for screen equipment. Where no corrective appliance is required the cost of the examination only can still be claimed.
If a contractor has incurred costs on work-related training courses he/she will need to provide details of the costs incurred. Subject to the expenses being ‘work-related training expenses’ a contractor in some instances may claim reimbursement of such costs. The training would need to be associated as a necessary expense in the performance of the current duties.
Tax relief for pension expenses is normally allowable however pensions requirements are complex and further advice should be sought from a Pensions advisor.
Expenses such as equipment necessary to perform your duties, personal incidental expenses whilst away on a work assignment, overnight accommodation when away from your workplace may be allowable. These would need to be assessed individually.