Freelance with Umbrella Company and Expenses

[Declanmorgan1982]

I am from Ireland and I have been offered 8 weeks construction work in London, with possibility of more work in a different location in the uk after that.

For the job I need to do a number of courses which will take at least 2-3 weeks, the course costs will be around 1300 I will also need to pay for accommodation and transport over the 2-3 weeks. Then I will have to sort out accommodation near the job for the 8 weeks, because it’s short term I expect this to be costly. As a PAYE worker it would cost me to take on this job. But I am really interest in this certain project. If I worked freelance, through an umbrella company would I

• Be able to go ahead with training now and then when I start working in a few weeks can the training receipts
  & cost of accommodation when training be counted as expenses.

• While working for the 8 weeks is my accommodation counted as an expenses.

In all honesty I am not try to bend rules in anyway just want to work on this certain project.

[sal]

I don't believe you will be able to expense the training cost, you should be able to expense the accommodation cost.

But i hope you are aware that passing something as an expense while freelance is not free money, your savings come from not having to pay tax on that part of your income (roughly 20%), but the money come out of your own pocket, not the client, unless you have an explicit arrangement to pass them on to the Client, but i don't think this is the case here.

Anyway it's best to get in touch with an Umbrella company (like Contractor Umbrella) and ask them concrete questions for their concrete offerings.

[LisaContractorUmbrella]

If you intended to work through an umbrella company solely for this contract then your workplace would be considered permanent and you would not be entitled to claim tax relief on any travel, accommodation or subsistence expenses. It would also be unlikely that the cost for the training course would be allowable.

With an umbrella company you are paid via PAYE; the contract rate is liable to be higher than it would be if you worked on the client's books but, as with any other employer, an umbrella company is legally bound to pay Employer's NIC's to HMRC which is taken from the contract rate along with their margin. Therefore your salary is unlikely to be high enough to cover the costs of undertaking the contract.

[Declanmorgan1982]

Thanks for your replies.

Can you tell me why I can’t write down the training course fees as expenses?

What I taught would happen is the company I’m working for would be invoiced for hrs done X hourly rate. From the invoice amount my expenses would be deducted (Accommodation, Transport, Banking, Phone, Umbrella Fee etc and I taught any training costs.) Then employer’s NI (13.8%) is paid. After that I pay employee’s NI (12%) & PAYE (20%), whatever is left is cash in my pocket.
The training courses are essential to me taking the job so can’t understand why they wouldn’t be counted as business expenses.

Yes sal I realise it’s only around 20% saving but all helps.

Lisa, the company told me there is the possibility of more work at a different location and if I take much more than 8 weeks to do this job I would anticipate no more work from them to me so based on this I would say I don’t intend to work through an umbrella solely for this contract.

Again thanks sal & Lisa.

[Jessica@WhiteFieldTax]

There is a dividing line on courses between "new skills" not allowed and "updating" allowed - that's the best and easiest language I can think off.

However working this through in my mind, those restrictions generally only apply for sole traders / controlling directors, as far as I'm aware they don't appy for "regular" employees (haven't checked re this, but never come across it in 29 years) - in this case not sure why they couldn't go through if OP was employed by an umbrella. Lisa? I'm sure I'm missing something, as it doesn't feel right, but logic says otherwise.

[LisaContractorUmbrella]

There is a dividing line on courses between "new skills" not allowed and "updating" allowed - that's the best and easiest language I can think off.

However working this through in my mind, those restrictions generally only apply for sole traders / controlling directors, as far as I'm aware they don't appy for "regular" employees (haven't checked re this, but never come across it in 29 years) - in this case not sure why they couldn't go through if OP was employed by an umbrella. Lisa? I'm sure I'm missing something, as it doesn't feel right, but logic says otherwise.

Hi Jessica I can't say categorically that it wouldn't be allowed only that it would be unlikely simply because the OP stated that he couldn't do the job without doing the training course therefore, arguably, it's not work related training and not deductible. Would need more info to make a firm decision but that was my initial gut feeling

[LisaContractorUmbrella]

Lisa, the company told me there is the possibility of more work at a different location and if I take much more than 8 weeks to do this job I would anticipate no more work from them to me so based on this I would say I don’t intend to work through an umbrella solely for this contract.

Again thanks sal & Lisa.

If you intend to work on more than one assignment whilst employed by the umbrella company then your workplace would be considered temporary and you would be entitled to claim travel, subsistence and accommodation expenses.

[Declanmorgan1982]

Thanks Jessica & Lisa for helping,

To further explain, the job is that of a construction site manager, one of the courses is a 3 day first aid course, I have already done a first aid course but it needs to be a 3 day first aid course done in the uk. I would say the training is very much work related training, if I was wasn't going to take on the contract in the uk I wouldn't need to do the training.

Again thanks

[LisaContractorUmbrella]

Thanks Jessica & Lisa for helping,

To further explain, the job is that of a construction site manager, one of the courses is a 3 day first aid course, I have already done a first aid course but it needs to be a 3 day first aid course done in the uk. I would say the training is very much work related training, if I was wasn't going to take on the contract in the uk I wouldn't need to do the training.

Again thanks

IMHO the training course would not be allowable as it is not specific to the work that you will be doing - a first aid course could be taken in conjunction with any role and even for a purpose that's not work related

[Jessica@WhiteFieldTax]

if I was wasn't going to take on the contract in the uk I wouldn't need to do the training.

Alas thats the bit that scuppers you.

Now roll forward three years and come to renew the UK first aid qualification, and the answers will probably be different.