Reply to: Freelance with Umbrella Company and Expenses

[LisaContractorUmbrella]

Technically there isn't a conflict there. If HMRC deem the training as BiK then the employer can pay the NI on behalf of employee. However your point is well made. I would forward the HSE guidance to your umbrella. If they say its BiK then your choices are either to suck it up or find an umbrella that takes a different view. You could also claim via personal tax self-assessment but presumably one reason to go umbrella is so as not to need bothering with this.



Frankly if an umbrella expected me to deal with HMRC re. expenses policy then I would be looking for another umbrella. The answer should be a clear yes or no.

I already gave a clear no He didn't like the answer so referred him to HMRC

[Contreras]

The Health & Safety laws set out what training is needed for what positions. On the HSE’s website it says

“Health and safety training should take place during working hours and it must not be paid for by employees.”

In my case if I was to pay for courses after paying PAYE (so if there not seen as expenses) it would be the employee paying for the training. I know the HSE are not HRMC and HRMC are the ones that matter here.

Technically there isn't a conflict there. If HMRC deem the training as BiK then the employer can pay the NI on behalf of employee. However your point is well made. I would forward the HSE guidance to your umbrella. If they say its BiK then your choices are either to suck it up or find an umbrella that takes a different view. You could also claim via personal tax self-assessment but presumably one reason to go umbrella is so as not to need bothering with this.

If you think you should be able to claim it then present your case to HMRC - explain you'll be working through an umbrella company, give them details of the course and the contract you'll be working on and see what they say

Frankly if an umbrella expected me to deal with HMRC re. expenses policy then I would be looking for another umbrella. The answer should be a clear yes or no.

[Sausage Surprise]

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.

Did anyone else read that para with an Irish accent?

[LisaContractorUmbrella]

If you think you should be able to claim it then present your case to HMRC - explain you'll be working through an umbrella company, give them details of the course and the contract you'll be working on and see what they say

[Declanmorgan1982]

Please don’t think I am trying to argue with you guys, I am not, just finding this difficult to understand. I honestly see the training course costs as expenses incurred wholly, exclusively and necessarily in performing my business duties.

The 3 day first aid course is for people to be appointed first aiders in high risk work, construction is considered high risk work. I will be appointed first aider on contracts I undertaken, I will never be an appointed first aider on any project that I am not getting paid to do. Another course is Health and Safety for Construction Managers again, this will only ever be used when I am working.

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

when I read the “could be” I ask myself is it yes or no. And in this case I say no. The training is been undertaken for a specific role. The Health & Safety laws set out what training is needed for what positions. On the HSE’s website it says

“Health and safety training should take place during working hours and it must not be paid for by employees.”

In my case if I was to pay for courses after paying PAYE (so if there not seen as expenses) it would be the employee paying for the training. I know the HSE are not HRMC and HRMC are the ones that matter here.

Please, I hope it doesn’t come across like I am arguing, I am not. I know you don’t make the rules and are just passing on your knowledge of them. I appreciate your help. Thank again

[Jessica@WhiteFieldTax]

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

An entirely reasonable response in terms of Umbrella Company Expense policy and/or the guidance an accountant may give a contractor client with own company.

However, you can see where expectations arise around deductibility. Imagine OP had been recruited on the books by ConstructionCo and they sent him on a first aid course during the first month so he can be appointed person. He wouldn't be expecting the course to be P11d'd, and neither would the payroll department I suspect. Equally ConstructionCo wouldn't expect the course to be disallowed. When I had more staff and used to send a couple on First Aid at Work courses there was no question of it being a BIK for them or blocked deduction for me.

Its one of those "tax nothings" that come up from time to time. The contractor, PSC or umbrella, comes off worse.

[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.

[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

[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]

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.

[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

[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.

[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.

[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.

[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.