Contractor umbrella companies allow you to claim your business expenses even if you are caught by the IR35 tax. The contractors come under the IR35 tax can’t claim their business expense without using the umbrella company and that is the reason of huge popularity of these companies. The claiming of business expenses reduces the income tax, which results in maximum take home pay. Also, it reduces the stress of taxman as the company will cut the tax every time before sending you the payments. Different companies offer different expenses that you can claim by using their platform, depending on their fees and experience in the field. The business expenses you can claim through an umbrella company while staying under the law of UK are listed below:
If you have to get some sort of training in the middle of any contract, you can ask for relief by submitting the receipts. The training should be relevant to your current contract to get the tax relief. In case, you have got a client who asks you to get training before starting the contract, still you can claim the expenses regarding your training. This can help you increase your take home pay.
With an umbrella company, you can claim your traveling charges as long as you keep the receipts of bus, tube, or train expenses. The contractors who travel by car can also ask for the relief and they can get 45p relief on a mile up to 10000 miles and 25p onwards. The exact amount of expenses that you can claim may vary according to the currently applied expense costs but you will be able to claim expenses as long as you have traveled for business needs. You will need to keep receipts to ensure that there is no problem with HMRC in case they ask for receipts.
Laptop Machines and Other Equipment
The umbrella solution offers you to claim the equipment purchasing relief, which is only allowed if the equipment is required for the current contract. When it comes to cell phone or any other communication device, you can claim it if you are using the device only for the project. However, you have to be very careful not to mix up personal usage with business usage. Remember, you will need to provide receipts which will reveal the truth about your expenses.
If you have a pension scheme and you are paying them on monthly or annual basis, you can ask for tax relief as it is fully legal and allowed by the HMRC. You can save a large amount of tax by claiming the pension funds. You can send more money to pensions fund if you are looking to save more but be sure to discuss it with your financial advisors. Some top umbrella companies will provide financial assistance and advice so that you can make the most of your time at the umbrella company.
If you have to pay any fees to a trading group, the umbrella service provider can claim it on your behalf to get the tax relief. This can help you in big way as you won’t have to worry about administrative hassle involved in such issues. Your umbrella provider will take care of all these problems for you.
The accommodation expenses can be claimed by the umbrella company if you are working away from home due to the requirement of the contract. Also, you can claim the evening meal as it is a business expense that you don’t have to pay if you are working at home. But you can’t ask for the lunch or breakfast as you can’t claim it since it won’t be a part of your business. However, if you lunch at workplace, you can easily claim it.
The charity contributions are fully allowable against the tax as per the UK law and if you are donating some money, you must ask for tax relief.
These are the business related expenses that you can claim once you are connected with an umbrella company. At the end, you have to keep the receipts of your expenses to claim them while paying the tax.