Tax Reducing Expenses

[adama1ex]

Hi,

I started my first contract role last month and travelling by train to my temporary workplace 3 days a week and working from home the other two. I started at the end of May so only worked 4 days in total that month. I received my payslip for this having submitted my receipts for my rail travel to my umbrella company for 3 of these days.

I am looking for clarity on the tax reducing expenses as having reviewed the payslip it's still not clear! These receipts I have submitted appear in my payslip as "Expenses Non Taxable", can you confirm if I am fully reimbursed for this amount? (3 journeys @ £16.10 each journey = £48.30) or am I actually just benefiting from the tax relief on the tickets, i.e am I just getting a certain percentage back from these and therefore still out of pocket as a result of the commute?

I am asking this because if I am not getting fully reimbursed for my travel I will consider relocating closer to the office. Sorry if this seems like a stupid question, I'm new to it and just looking for clarity!!

Thanks

[stek]

Just the tax relief, why would you think different?

Would else would pay your expenses other than yourself?

[malvolio]

There are no such things as tax-reducing expenses. In effect you can reclaim the tax you paid on the earned income you used to buy "stuff" that you need exclusively for business on the basis that the tax liability is YourCo's, not yours, and covered by YourCo's CT.

Be as clear on this point as you are that You and YourCo are two completely separate legal persons, or it will come back to bite you.

[TykeMerc]

There are no such things as tax-reducing expenses. In effect you can reclaim the tax you paid on the earned income you used to buy "stuff" that you need exclusively for business on the basis that the tax liability is YourCo's, not yours, and covered by YourCo's CT.

Be as clear on this point as you are that You and YourCo are two completely separate legal persons, or it will come back to bite you.

Umbrella user, somewhat different considerations.

To the OP, you get the benefit of getting your expenses refunded to you from your daily rate and the money refunded isn't subjected to tax or NI's.

[malvolio]

Umbrella user, somewhat different considerations.

To the OP, you get the benefit of getting your expenses refunded to you from your daily rate and the money refunded isn't subjected to tax or NI's.

To be precise, the expenses are deducted from the gross before the PAY/NIC calculation is made. The net result is much the same, of course.

Same rule applies though, especially with umbrellas. If you're making a profit - even by some magic dispensation deal between the umbrella and HMRC - someone is breaking the law but the liability stays with the individual.

[adama1ex]

Thanks for that, seems so obvious now!

[mudskipper]

Thanks for that, seems so obvious now!

It's an alarmingly common misconception. If you haven't already, have a read of the first timer guides --->