As has been mentioned already, travel expenses are not claimable through an umbrella unless you can show you aren’t caught by the SDC rule. Nobody is disputing that.
Claiming expenses through an umbrella company
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Previously on "Travel expenses - accountant seems useless"
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Pretty sure TCP is right. Can't be under SDC with a brolly and claim. But if you aren't, you may be able to claim expenses for traveling to temporary workplaces.
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I don't think there's any dispute that travel is technically reclaimable if it's to a genuine temporary workspace. However it would be very rare for this to apply in an Umbrella scenario and I wouldn't be surprised if many Umbrellas just operate as though it's not possible. They'll be right almost all the time.
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Originally posted by GhostofTarbera View PostNo you won’t
But I was hoping it would be someone who doesn't regularly post rubbish
Any chance one of our accountants chime in here?
I still don't see how travel expenses can be reclaimed pre-tax (so as to save Income tax/NI) in an Umbrella scenario.
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Originally posted by TheCyclingProgrammer View PostIf you're with an umbrella, are engaged on multiple assignments (so each client site can qualify as a temporary workplace) and you are not caught by the SDC rule, then you can "claim" expenses. With a brolly, all that really means is that your net pay after umbrella fees gets carved up into "expenses" (not taxable if they are legitimate tax-deductible expenses) and "salary" (subject to PAYE as usual).
So if your day rate is £500, the brolly charges £20/day admin fees and you claim £30 in travel expenses, you will receive a reimbursement of £30 tax free for your expenses (taken out of the £480 left after brolly fees) and the remaining £450 will be income subject to PAYE.
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Originally posted by Paralytic View PostI've never seen this before (have never been via Umbrella). Can you clarify? So if you're via an Umbrella but not under SDC, you can still claim expenses? How does that work and does it actually provide any savings? eg, does it reduce tax/NI in the Umbrella calculations?
So if your day rate is £500, the brolly charges £20/day admin fees and you claim £30 in travel expenses, you will receive a reimbursement of £30 tax free for your expenses (taken out of the £480 left after brolly fees) and the remaining £450 will be income subject to PAYE.
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Originally posted by ladymuck View PostTravel BUT this was in the before time when such things were allowed. Nowadays this is no longer possible.
"You work for an umbrella over multiple assignments and are not caught by the "supervision, direction or control" rules."
And if so, what is the mechanism by which this is done?
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Originally posted by Paralytic View PostWhat sort of expenses were these?
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Originally posted by ladymuck View PostWhen I last used an umbrella, I would fill in an expenses sheet with receipts and that would be shown on my payslip as an in and out transaction but they would be pre-tax deduction, post-tax addition (or some such, the terminology escapes me). So, you would effectly not have any extra cash in your pocket but you didn't pay tax on that portion of your day rate.
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Originally posted by Paralytic View PostI've never seen this before (have never been via Umbrella). Can you clarify? So if you're via an Umbrella but not under SDC, you can still claim expenses? How does that work and does it actually provide any savings? eg, does it reduce tax/NI in the Umbrella calculations?
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Originally posted by TheCyclingProgrammer View Post* You work for an umbrella over multiple assignments and are not caught by the "supervision, direction or control" rules.Last edited by Paralytic; 15 November 2019, 11:55.
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Originally posted by Cirrus View PostI recall a lot of whingeing on IPSE about no longer being able to claim travel.
Also a friend of mine was recently a permie with a very large organisation, FootsieCo. His workplace was London but because he had teams in both London and Edinburgh, he had to spend 2-3 days per week in Edinburgh.
FootsieCo suddenly sent him a large amount of money. When he asked why, they said it was to compensate him. They had put all of his air fares and hotels on his P11D so he was facing a massive tax bill. Apparently this was part of a wider discussion they'd had with the Revenue.
Nobody seems to be supporting me but I remain sceptical that contractors can now legitimately claim travel from home to client except maybe if they only go on rare occasions.
I had a friend in a similar situation to your friend, and the problem was the 24 month rule.
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Originally posted by jmo21 View PostAll true, but I think the OP simply doesn't understand that he (or rather his company) effectively saves 19% of the value of his total expenses due to them being offset against corp tax.
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Originally posted by TheCyclingProgrammer View PostThere are a number of circumstances where travel costs would not be reclaimable:
* You're a permie and your travel is considered ordinary commuting to a permanent workplace.
* You work for an umbrella and perform a single assignment, making your client office a permanent workplace.
* You work for an umbrella for a number of assignments but due to the rules around "supervision, direction or control" you are unable to reclaim travel expenses.
* You work for your own Ltd and are operating under IR35
* You work for your own Ltd and are operating outside IR35, work on-site at least 40% of the time andyour current contract has exceeded (or you expect it to exceed) 24 months.
Conversely, there are scenarios where you can legitimately claim travel expenses as a contractor:
* You work for an umbrella over multiple assignments and are not caught by the "supervision, direction or control" rules.
* You work for your own Ltd and are operating outside IR35 and are not caught by the 40%/24 month rule for travel to a temporary workplace.
* You work for your own Ltd outside of IR35 and are travelling for some other business purpose besides working on-site.
All true, but I think the OP simply doesn't understand that he (or rather his company) effectively saves 19% of the value of his total expenses due to them being offset against corp tax.
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