Claiming Expenses as a Contractor

What expenses can I claim back as a self-employed professional? If you are self employed, either as a Limited Company, a Sole Trader or through an Umbrella Company, you can claim money back on legitimate expenses to minimise your tax bill - but what can be reimbursed? Take a look at James' typical outgoings and see where you could make savings too. Remember! Evidence is crucial when claiming expenses, as HMRC may ask you for this information. The best way to be safe, is by keeping original receipts. BUSINESS MILEAGE* OR FUEL* You can also claim money back on other forms of transport, even cycling. For every mile you travel, you can get 20p. James travels 40 miles per day over 20 working days travelling to and from his place of work. £360 per month James uses his car for business purposes. He can claim back 45p a mile for the first 10,000 miles and 25p per mile after that. LUNCH When working through an Umbrella Company dispensation rules will apply and will vary with each provider. Typically, if you work more than 5 hours per day, you can claim up to £5 and up to £10 if you work 10 hours or more each day. James spends £5 per day £100 over 20 working days. per month This could include breakfast, lunch and dinner. James can claim the cost of food and drink on a business trip, providing he keeps his receipts. BUSINESS-RELATED TRAVEL Return train travel from Manchester to London plus an Anytime Travelcard in the capital. £80 + £16.40 0000 0000 0000 This could include train travel, toll road charges, air travel and more if you have to travel relating to your business. ACCOMMODATION NEWS As well as the cost of accommodation and meals while you are away on your business trip, you can also claim a further £5 for personal incidental expenses - e.g. telephone calls or newspapers. £115 Don't forget the small stuff! If you have a coffee - make a claim. James stays in a hotel overnight, plus has breakfast and a drink PHONE BILL If you are a sole trader or the phone contract is in your name, you can only claim calls relating to business usage. As well as claiming for your mobile phone, you can also claim a proportion of landline costs, based on business use. James uses a smartphone to keep in contact with his clients via calls and emails. £55 per month James' mobile phone is in his Limited Company's business name, so he can claim all line rental and call charges. TRAINING COURSE James attends an IT course specific to the software that his £129 client is using. You can claim the cost of work-related training courses, providing that they are essential to the job or required by your client. ACCOUNTANCY, INSURANCE AND OTHER PROFESSIONAL FEES/MARGIN When working through an Umbrella Company, insurance is included in the margin. James is an IT professional and each year he pays £118 for membership of the £9.83 per month IT Chartered Institute of IT. James uses an accountant and has insurance. £125 per month + £34 per month You can also reduce your tax bill by getting relief on any accountancy, legal, insurance or professional subscription fees that you pay. Brookson can take the hassle out of claiming expenses. • James simply submits his claim via our website by scanning in his expenses. Connect is a unique online portal for Brookson members, which delivers an updated financial position of your business, giving you the information you need, when you need it, 24/7. • The service can be used on the go, via a tablet or smartphone. Hassle-free money management • Photos of your receipts are securely stored in Connect for up to 8 years. Monthly reduction in taxable income: Better way of managing your finances Updated financial information £1024.23 REMEMBER! • Your monthly total expenses reduce the amount of taxable income. This means your take home pay increases, but you will have had to pay out in the first place to be able to make the claim. • Get into a routine of submitting and logging your expenses regularly to keep an up-to-date view of your financial position. • If you are claiming VAT on expenses, then a VAT receipt is required as proof of purchase. • For example, James' £115 claim for accommodation would reduce his taxable income by £115 - but he would have paid out the same amount in the first place. • Umbrella expenses must be wholly exclusively and necessarily in the performance of your employment duties. * If the contact is longer than 24 months, you are unable to claim expenses. This rule does not apply for Sole Traders. ** As a Sole Trader, you can claim based on the actual cost of fuel. This is useful when fuel prices are rising, but may create an extra administrative burden because you will need to deduct the proportion of personal use and keep all receipts. Bbrookson an extra Freedom to earn in f 8+ 0800 230 0213