Which umbrella company after April changes?

[Cowboy Bob]

So if you spend more than what is stated on the dispensation, you just need to provide the receipt to offset it?
Is that right Lisa? I thought you previously said that you needed receipts?

The contractor needs to have all receipts for everything spent in case of a tax audit.
The brolly only needs copies of receipts for anything over their dispensation.

[malvolio]

Oh FFS it's not hard. Your employer, the brolly, has made a rule that you can claim up to £x without having to show them a receipt. If you want to claim over that, they might have to prove their records to the taxman because it exceeds the amount they have agreed with the taxman they can claim without detailed receipts. That is what "dispensation" means, it is an agreement between them and the taxman to do with their record keeping, and nothing to do with you. So you can claim anything you like, excpet they may correctly ask for a reciept in some cases.

However, any - note that, ANY - money you claim as work-related expenses has to be provable to the taxman, and that is nothing to do with the brolly. So you need to keep all receipts or other proof of payment for 6 years, just in case. And if you do get investigated and can't prove it, all your expenses claimed for the last 6 years will be treated as income and they will ask for the PAYE and NICs due on it. Plus interest. And possibly penalties for not keeping proper records.

It's called "not breaking the Law" and sadly ignorance of the law is not a defence. So take note.

[lilfreckles]

You lot are simply trying to make it harder for the poor chap that asked a simple question.

Diffrent PAYE provided diffrent amounts of £ for expenses claimed, therefore it creates something called competition. Also they do charge diffrent rates for their services and there is one umbrella out there that lost is dispensation!

Yes, like Lisa says it is common sence to keep receipts as a contractor you can back up what you say, any suprise audits, receipts lost through the post etc. Is not hard is it?

[Money Money Money]

Easy chaps lets not go pointing the "breaking the law" finger at me.

I work in recruitment and am trying to update our PSL of PAYE Umbrellas, Now I know how the majority of you feel "Set up LTD" but a lot of people:

-Don't have time
-Not sure what the future of contracting holds
-Can't be arsed

So instead of me simply saying "do a Google search", I thought I would try and put a few on a list.

Out of the 6 companies I have spoken to, 4 need the contractor to send in receipts for everything except food allowance. Does this mean they don't have a dispensation then?

Just trying to help mate, Please don't think I am trying to do anything dodgy.

[LisaContractorUmbrella]

You lot are simply trying to make it harder for the poor chap that asked a simple question.

Diffrent PAYE provided diffrent amounts of £ for expenses claimed, therefore it creates something called competition. Also they do charge diffrent rates for their services and there is one umbrella out there that lost is dispensation!

Yes, like Lisa says it is common sence to keep receipts as a contractor you can back up what you say, any suprise audits, receipts lost through the post etc. Is not hard is it?

Sorry Lilfreckles but you have missed the point a bit - competition between umbrella companies cannot be dictated by their expenses 'policies'. The expenses that any contractor can claim are determined by the Inland Revenue and not by the umbrella company. A dispensation allows the umbrella company to process those expenses covered by the dispensation without recording them on a P11D (per standard accounting procedures) - however, it does not mean that the contractor does not have to have receipts to cover that expense. It also does not mean that an umbrella company cannot process an expense claim that is not covered by their dispensation - they will just need your receipt in order to be able to do so.

Please do not be fooled by some umbrella company's marketing strategies - if you claim an expense you must be able to prove that you have incurred the cost and it must have been incurred wholly and exclusively because of your contract.

[malvolio]

And we are trying to point out that expenses have no part in income generation, that the contractor must retain recepipts for everything claimed and how the umbrella handles its bookeeping and Tax records is nothing to do with the contractor or the agency.In fact, most of us are agreed that any umbrella that advertises income on the basis of expense claims made should not be in business. Use that as your PSL criterion and help stop them fleecing your contractors.

[ASB]

So if you spend more than what is stated on the dispensation, you just need to provide the receipt to offset it?
Is that right Lisa? I thought you previously said that you needed receipts?

I think Lisa said you need to be able to provide receipts. If claims are within the dispensation then you do not need to provide them to the umbrella, merely the taxman in the envent of an investigation.

Anyway, regarding my example. You are likely to meet whatever admin system the brolly has in place, there are a number of things that may happen:-

1) The brolly cap the claim at £70. In this case the £70 is covered by the dispensation and won't need to go on a P11D. You can claim the remaining £30 through your tax return. Might be as well to add a note.

2) The brolly pay the claim of £100. The £30 should go on your P11D. [I believe it is only the amount in excess of the dispensation that is entered on the P11d]. You show £30 spent and £30 claimed. Your tax return matches the p11d, you get £30 knocked off you taxable income everybodys happy.

[LisaContractorUmbrella]

Easy chaps lets not go pointing the "breaking the law" finger at me.

I work in recruitment and am trying to update our PSL of PAYE Umbrellas, Now I know how the majority of you feel "Set up LTD" but a lot of people:

-Don't have time
-Not sure what the future of contracting holds
-Can't be arsed

So instead of me simply saying "do a Google search", I thought I would try and put a few on a list.

Out of the 6 companies I have spoken to, 4 need the contractor to send in receipts for everything except food allowance. Does this mean they don't have a dispensation then?

Just trying to help mate, Please don't think I am trying to do anything dodgy.

Money - it is good that you are trying to put a PSL together but any company you are going to recommend needs to be thoroughly researched to make sure that they will not give your contractors bad advice.

You should ensure that they do not advertise a 'no receipts required policy' - all contractors will need to have receipts to prove to the Inland Revenue that the expense was genuine. You will find that the 'small print' will state that it is in fact the umbrella that doesn't necessarily need the receipts.

You should also make sure that they do not allow a 'daily subsistence' of anything in excess of £5 per day. No umbrella company should process a fixed daily amount for meals or anything else - again, the expense has to be incurred and it has to be proveable.

Some companies charge a percentage of your contractor's income as a fee - you may or may not feel comfortable with this but you should confirm all an umbrella company's charges including sign up or leaving fees

Any umbrella company that advertises 'take home 85% of earnings' will be basing take home figures on over inflated expense claims and any online calculator should ask for a seperate expense figure to be entered - if it doesn't assumptions will be made that cannot be accurate.

Finally stay well clear of any company that advertise an 'Inland Revenue Approved Expenses Policy' - there is no such thing

[Newby]

Surely it is the employer (the umbrella) that would be at fault for paying/granting expenses to an employee, rather than the employee being at fault for accepting them. I think that the employer is more likely to get asked to cough up for any 'issues' with receipts rather than the employee. It is the risk of the brolly not the employee. PAYE audit anyone?

[malvolio]

**** me there are some dim people out there..

Use an unbrella to get yourself safe from IR35 - as an 'employee' of the brolly it doesn't apply to you - but realise that you are still supposed to be making your own decisions and to be responsible for your own taxation. The brolly are merely advisors and admins, the risks are all yours: if you can't hack that idea, go get a permie job.