Umbrella 101 – What is an Umbrella Company?
April 6th and IR35 is here. Your agency has told you, you fall inside of IR35 and you now need to use an umbrella company. But
One of the most frequently asked questions that we receive is in relation to reclaiming expenses as a contractor working through our umbrella services – here’s what you need to know.
Contractors who have been around for some time would have noticed significant changes in this arena over the years. We remember receiving receipts and train tickets scanned and faxed to us on a daily basis. At that time, certain expenses could be used to offset against tax liability. However, from April 2017 a new legislation called the Finance Bill 2016 (under S339A ITEPA 2003) came into force for workers working through an employment intermediary or umbrella company.
Restrictions were placed against tax relief for home to work travel and subsistence expenses for workers engaged through an employment intermediary.
The travel and subsistence expense rules apply in the same way as they would if the worker was engaged directly as an employee of the end client. In simple terms, just as a permanent employee can’t claim, it is no longer possible to claim expenses for business travel including accommodation or food and drink purchased as part of the working day.
These restrictions apply to all those who fall under Supervision Direction and Control (SDC):
If a person falls under even just one of the above categories, then SDC is deemed to apply. As a general rule, HMRC considers that agency workers who provide services in industries where the work is governed by regulations or frameworks, they will be subject to SDC, examples of this are teachers, doctors, nurses and social workers. Regulatory bodies such as the General Medical Council and Nursing Midwifery Council set a standard for all to adhere to.
Our default position at Healthchart is that all contractors fall under supervision, direction and control therefore we do not allow tax relief for any travel and subsistence expenses to offset against the tax we deduct in-line with our PAYE obligations.
If you feel that SDC does not apply to you, please refer to HMRC guidelines and contact us.
What if you have lots of other work-related expenses? You can discuss this with your agency or end client as they may be willing to reimburse at least part of your expenditure. There is usually an uplift in the pay rate when being paid through an umbrella, so they may argue that this rate is to cover any added expenses. However, if you don’t ask, you will never know.
If you do incur other legitimate expenses other than travel & subsistence, it would be worth keeping a record of these and submitting a self-assessment at the end of the tax year (we have affiliated companies that can help with this – just ask).
If you have any questions about claiming expenses through an umbrella company, or about SDC parameters please be in touch, we would be happy to provide a free consultation that will answer all of your questions.
April 6th and IR35 is here. Your agency has told you, you fall inside of IR35 and you now need to use an umbrella company. But
Umbrella Explained: Contractor Salary and Deductions You’ve been asked to use an umbrella company, but one aspect that can be confusing is how an umbrella
Healthchart Holiday Pay Policy We’re often asked how holiday pay works when working via an umbrella company. Umbrella employees are as entitled to holiday pay
Recruiters Cannot Dictate a Contractors Umbrella Company Can my recruitment agency dictate what umbrella company I use? As IR35 approaches more contractors are seeking the
*A £50 Amazon voucher is available to any contractor joining our PAYE Umbrella Payroll services 20/11/2020 – 30/4/2021. Your voucher will be released to the email address we have on file following one month (or 4 weeks for weekly processors) of successfully processed timesheets. For additional details or to enquire further please contact support@healthchart.co.uk
Registered Office Address: Solway House Parkhouse Road, Kingstown, Carlisle, CA6 4BY
Company: 09969066 | VAT No: 28538546
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.