Expenses question

**Contreras** · 25 June 2014, 00:02

Originally posted by sophia57 View Post

Hi peeps!

I'm very new to contracting and I wondered if anyone could shed some light on expenses for me if I am working away from home. I will be working in London Monday to Friday through an umbrella company, but home for me is Edinburgh. I just don't understand how it will work for me if I claim my accommodation expenses in London Monday to Friday. Does claiming expenses mean you get back every penny? For example if my rent in London comes to £700 a month if I claim that back through my umbrella company will I get the full £700 back? or what percentage of that £700 would I get back?

Thank you in advance

You'll get 100% of legitimate expense claims. It'll come out of the revenue you are generating from the contract, so your salary would be proportionally lower, however the salary is taxable whereas legitimate expenses are not. You should ask the umbrella co. to explain this to you and anything else that's not clear.

**sophia57** · 25 June 2014, 00:12

Originally posted by Contreras View Post

You'll get 100% of legitimate expense claims. It'll come out of the revenue you are generating from the contract, so your salary would be proportionally lower, however the salary is taxable whereas legitimate expenses are not. You should ask the umbrella co. to explain this to you and anything else that's not clear.

Sorry I don't quite understand. If I make £3000 a month and claim £700 accommodation expenses would I not receive £3700?

**Contreras** · 25 June 2014, 06:23

Originally posted by sophia57 View Post

Sorry I don't quite understand. If I make £3000 a month and claim £700 accommodation expenses would I not receive £3700?

~~Are you serious? Me thinks this is a sockie wind-up but I'll answer anyway.~~

If the umbrella invoices the client at £3000 per month and then pays you £700 expenses, they have £2300 remaining to pay your salary, tax, national insurance, and deduct their admin fee.

If an umbrella could magic up £700/mo. from thin air then we'd all be using them!

Only way this could happen is if the client agrees to pay expenses in addition. I.e. £3000 + £700.

**cojak** · 25 June 2014, 06:38

Thanks Contreras,

I suspect that a few newbies may indeed think like this and so putting it in black and white will help any lurkers.

**TheFaQQer** · 25 June 2014, 08:41

What does your employer say about their expenses policy?

**kal** · 25 June 2014, 08:54

Indeed expenses come from out of your contracted rate or you (with agreement) invoice your client for them. Money does not appear out of thin air as far as I know

**northernladuk** · 25 June 2014, 09:13

Be very careful with Umbrellas though. You won't be able to claim expenses for your last gig as it will become your permanent place of work not a temporary one. The same if you only do one gig for them. It will automatically be a perm one and you will have to pay your expenses back.

**Contreras** · 25 June 2014, 09:19

Originally posted by northernladuk View Post

Be very careful with Umbrellas though. You won't be able to claim expenses for your last gig as it will become your permanent place of work not a temporary one. The same if you only do one gig for them. It will automatically be a perm one and you will have to pay tax on your expenses ~~back~~.

FTFY. (again

)

**TheFaQQer** · 25 June 2014, 09:33

Originally posted by northernladuk View Post

Be very careful with Umbrellas though. You won't be able to claim travel, subsistence and accommodation expenses for your last gig as it will become your permanent place of work not a temporary one. The same if you only do one gig for them. It will automatically be a perm one and you will have to pay your travel, subsistence and accommodation expenses back or declare them as a BIK and pay tax on them.

FTFY

The same is true of your own limited company.

Expenses question