Simple expenses question (from a newbie!)

[LisaContractorUmbrella]

You will not get the full amount back unless the expense is being reimbursed by your agency or client; otherwise the expense will be processed as a tax benefit i.e. the expense reduces your tax liability. Either way you will need to be sure that the expense is allowable and that you can back up the claim with receipts.

HTH

[Hex]

Hi guys. I've just started contracting under an umbrella co. It's going well and my first contract is about end so I am going to interviews. My brolly co says I can claim expenses on rail fare and subsistence for my interviews.

Can anyone verify this? Also how much will I get back? I assume just the tax amount on the rail fare and subsistence, not the full amount?!

Sorry for the daft questions! Thanks everyone.

Jonny

For valid expenses you will get the full amount back. But you must realise that money doesn't magically appear from nowhere. The full amount you get back will be deducted from the gross amount that the umbrella receives from work you do for the eventual client. So there will be less left to pay you as salary. The bottom line is that what you claim as expenses allows you to extract the money you've earnt without paying income tax or NI on it. Anything left is paid to you as PAYE after the deduction of income tax and NI. So the net saving to you is the tax and NI.

The expenses should be valid expenses that you have actually paid out and please keep receipts so you can prove (if you ever need to) that the expense was actually incurred.

[SueEllen]

You need to keep proper receipts or a proper mileage log.

The full amount would be allowable against tax i.e. the amount would be deducted from your income and then you would be taxed on the rest. Though with mileage there are statutory amounts you can claim depending on your vehicle.

To be honest it's more tax efficient if you are earning over something like £35,000 to be a limited company. (It's more work but not that hard.) Plus you would find that while the umbrella won't let you claim certain expenses your accountant will.

[jonnyguitar]

Hi guys. I've just started contracting under an umbrella co. It's going well and my first contract is about end so I am going to interviews. My brolly co says I can claim expenses on rail fare and subsistence for my interviews.

Can anyone verify this? Also how much will I get back? I assume just the tax amount on the rail fare and subsistence, not the full amount?!

Sorry for the daft questions! Thanks everyone.

Jonny