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  1. #11

    Umbrella Queen

    LisaContractorUmbrella's Avatar
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    Quote Originally Posted by Wanderer View Post
    So if I spend £2, can I claim £10 as per the scale rate dispensation?
    In theory yes but the £10 bench mark scale rate is to cover two meals - one meal is only £5 - I'd be surprised if you could get 2 meals for £2
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  2. #12

    Still gathering requirements...


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    Quote Originally Posted by LisaContractorUmbrella View Post
    We have had a great deal of enquiries lately about umbrella companies 'expenses policies' changing so I thought I would offer a little clarification.

    Umbrella companies do not really have an 'expenses policy' as they can only process those expenses that will be allowed under HMR&C guidelines, the basic principals of which are that an additional cost must be incurred and it must be wholly and exclusively because of the contract. HMR&C do conduct random checks of individuals and if you do not have receipts to back up your expense claims you will be expected to pay up any tax owed as well as penalties and interest where applicable. Although the umbrella company would be investigated if a large number of individuals were over-claiming expenses, the liability would lie with the tax payer.

    Almost all umbrella companies have a dispensation (purely a tool for accountants so they can avoid filling in loads of forms) and some have scale rate dispensations; these were introduced by HMR&C themselves to save time. A scale rate dispensation allows a fixed amount to be claimed for subsistence when a worker is at a temporary location BUT the rules surrounding expenses still apply so there still has to be an additional cost to the individual and if you don't spend anything you can't claim anything. Within HMR&C claiming a scale rate payment when no cost was incurred was a disciplinary offence.

    It seems as though some contractors think they are 'losing money' as their umbrella company is no longer allowing scale rate payments (as they are processed as a tax benefit,this would have the result of reducing take home pay) - the likely reason for this is that the scale rate dispensation has been withdrawn which means that HMR&C are not happy with the way that the umbrella company is dealing with expense claims. You should be aware, if you are in this situation, that you are not 'losing money', you are in fact earning now what you should have been earning as the expenses you have been claiming have been disallowed and should never have been allowed in the first place.

    Umbrella companies usually have experts on hand to answer queries about expenses but they should also be able to back up their answers with excerpts from HMR&C manuals - at the end of the day the tax payer is responsible for their own tax so, if you are not sure of the advice you are given, contact HMR&C direct and ask them the question.
    Just like 715 years ago but why should the worker pay company NI

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