We’ve added a new video to our YouTube series. In this short animated clip, we explain what expenses you can claim through an umbrella company. Please scroll down to see the video and the supporting transcript.
Transcript – Can you claim expenses through an umbrella company?
Before 2016, many umbrella company employees could claim tax relief on travel and subsistence expenses. This was a major attraction of using umbrella companies for payroll. However, the government stopped this in 2016 by introducing legislation referred to as Supervision, Direction and Control – or shortened to just SDC. Essentially, the government decided that umbrella employees were operating just like workers in permanent employment, but permanent employees could not claim tax relief on travel and subsistence expenses – making it unfair.
Since 2016, umbrella employees are not eligible to claim tax relief on travel and subsistence expenses if they are subjected to supervision, direction or control while undertaking tasks as part of their assignment. As umbrella companies provide a popular payroll service for those inside IR35, the new SDC legislation stopped almost every umbrella employee from accessing tax relief on travel and subsistence expenses.
Nowadays, the only expenses that umbrella employees can compliantly claim are reimbursed expenses.
The government state that such an expense “must be incurred wholly and exclusively in the performance of the duties of the employment.” A few examples include clothing for work, equipment, mileage for work travel, overnight stays, and more.
We recommend you visit the government’s website for more information and speak with your umbrella company if you believe you should be entitled to reimbursed expenses. Many of the leading umbrella companies in the UK will have strict and compliant procedures in place to assist you. The umbrellacompanies.org.uk website also has more information about umbrella company expenses.
Before choosing an umbrella company, always make sure they are compliant. We recommend that you only seek the services of an umbrella company with an FCSA or Professional Passport accreditation because these businesses have undergone strict audits to ensure they operate compliantly and in the best interests of their employees.
Please visit the Umbrella Companies YouTube Channel
The new Umbrella Companies YouTube Channel features over a dozen short and helpful videos that aim to answer contractors’ and freelancers’ most commonly asked questions about umbrella companies. We hope you find them helpful. More videos are being added on a weekly basis, so please check the YouTube Channel regularly.
Top 10 umbrella companies
To help make your search for a compliant umbrella company easier, we have collated a list of our top 10 umbrella companies. They are all accredited by either the FCSA or Professional Passport, and some have special offers at the moment that you won’t want to miss.
