Can Umbrella Workers Claim Expenses in 2025? The Full Rules Explained
One of the most common questions asked by umbrella employees is: “Can I still claim expenses?”
The short answer in 2025: yes, but only in limited circumstances.
Umbrella workers are employees for tax purposes, which means the ability to offset expenses against tax has been heavily restricted by HMRC in recent years. The days of widespread travel and subsistence claims for contractors are long gone. However, certain business-related expenses remain allowable—provided you follow the rules carefully and keep clear records.
This article explains the current 2025 expense rules for umbrella workers, highlights common pitfalls, and outlines exactly how to claim compliantly.
Understanding Your Status
When you work through an umbrella company, you are treated as an employee. You receive PAYE payroll, national insurance deductions, and statutory benefits such as holiday pay.
The flip side? HMRC expects umbrella employees to follow the same rules as traditional employees when it comes to claiming expenses. That means the scope is narrower than self-employed contractors once enjoyed.
Your umbrella company acts as your employer, and it is their responsibility to ensure any expense payments they reimburse are fully compliant. If they get it wrong, you—not the umbrella—could face HMRC scrutiny.
What Expenses Are Typically Allowable?
a) Travel Between Assignments
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Not Claimable: Home ↔ work commute is never allowable under HMRC rules.
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Potentially Claimable: Travel between temporary workplaces within the same assignment day.
Example: If your contract involves working at Client A in the morning and Client B in the afternoon, mileage or train tickets between the two locations may qualify.
b) Accommodation and Subsistence
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Overnight Stays: If you must stay away from home overnight for work, reasonable hotel or rental costs are usually claimable.
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Meals: Food and drink purchased during business travel can be reimbursed, provided it meets HMRC’s definition of “subsistence” (not entertainment).
Tip: Stick to HMRC benchmark rates (e.g. £5 for a meal when away from home for 5+ hours, £10 for 10+ hours, £25 overnight) unless you have itemised receipts.
c) Work-Related Equipment and PPE
Specialist tools or protective equipment required for your role may be covered. For example:
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Safety boots for a construction assignment.
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Specialist software licences for an IT contractor.
Generic items like laptops, mobile phones, or standard stationery are rarely reimbursed unless your role demands them exclusively.
d) Training and Development
Employer-funded training is allowable if it is wholly, exclusively, and necessarily required for your assignment. General CPD (continuing professional development) is not.
Example:
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A crane operator required to renew a specific safety certificate = claimable.
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A general “leadership workshop” = not claimable.
e) Professional Subscriptions
If your role requires membership of a professional body (e.g. the Nursing & Midwifery Council or the Law Society), the umbrella may reimburse it. Optional subscriptions, magazines, or unions are typically excluded.
2025 Update: What’s New?
A few noteworthy developments have shaped expense claims in 2025:
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Digital Record-Keeping: HMRC now explicitly accepts digital records, meaning scanned receipts and mileage-tracking apps are sufficient evidence.
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Closer Monitoring: Compliance checks on umbrella companies have intensified, with HMRC increasingly targeting “overly generous” expense schemes.
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Simplified Policies: Many umbrellas now issue one-page expense policies to employees, setting out exactly what is and isn’t reimbursable—minimising grey areas.
How to Claim Correctly
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Confirm Eligibility with Your Umbrella Company
Always read the umbrella’s expenses policy before submitting claims. Some umbrellas ban all but the most basic reimbursements. -
Log Everything
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Keep mileage logs with start and end locations, distance, and purpose.
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Save every receipt—even small ones.
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Submit Promptly
Most umbrellas require expense claims by a set payroll cut-off (often Monday noon for Friday payroll). Late submissions may roll into the next period. -
Stay Within HMRC Limits
Claiming lavish meals, premium hotels, or inflated mileage can flag your account for review. Stick to reasonable, business-necessary costs only.
Common Pitfalls to Avoid
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Confusing “home-to-work” travel with business travel. The daily commute is never allowable.
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Claiming without receipts. HMRC can disallow claims without clear evidence.
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Submitting “round numbers” (e.g. £10 for every lunch). This raises compliance red flags.
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Using umbrella companies that promise “generous expense allowances.” This is often a sign of non-compliance. This is another reason choosing a compliant umbrella company is so important.
The Bigger Picture: Why Rules Are Tight
Historically, umbrella and agency workers could claim broad travel and subsistence expenses. HMRC viewed this as a loophole, allowing employees to gain a tax advantage over permanent staff.
The Finance Act 2016 effectively closed this door, restricting claims unless travel is to a “temporary workplace” and not part of a regular commute. These restrictions remain in force today, with little indication of change in 2025.
Quick Reference Table
| Expense Type | Allowed? | Notes |
|---|---|---|
| Daily Commute | No | Home ↔ workplace not allowed |
| Travel Between Clients | Yes | Must be assignment-related |
| Overnight Accommodation | Yes | Business necessity only |
| Subsistence (Meals) | Yes | HMRC benchmark rates apply |
| Specialist PPE / Equipment | Yes (limited) | Only if required for role |
| Training | Sometimes | Only if directly contract-related |
| Professional Subscriptions | Sometimes | Must be required by employer |
Final Thoughts
In 2025, umbrella workers can still claim expenses—but only in a narrow set of circumstances. The emphasis is firmly on compliance, with HMRC continuing to clamp down on inflated or illegitimate claims.
The golden rule: if in doubt, don’t claim it. Speak to your umbrella company, keep meticulous records, and only submit expenses that are clearly business-related. This approach protects you from unexpected tax bills while ensuring you receive every legitimate reimbursement you’re entitled to. For further information you can also visit the HMRC A-Z of expenses and benefits.
