Umbrella Company Expenses Explained
There are 2 types of Cephas expenses:
Chargeable and Non-Chargeable Expenses.
Chargeable expenses are ones the end client or agency have agreed you will be reimbursed for. We claim these back on your behalf – all you need to do is submit valid tax invoices to us.
There is no deduction to your tax for these type of expenses because you are reimbursed in full for them.
Non-chargeable expenses are expenses you incur but can’t claim back from the end client or agency. They can however reduce your tax liability by being allowed as a deduction before calculating your tax liability i.e. we can pay you for these tax free.
The rule is the expense must be incurred “wholly, exclusively and necessarily in performing your duties”.
In respect of claiming expenses we require receipts for the full amount claimed except in respect of mileage and subsistence claims. For these you can only claim for costs incurred up to our maximum scale rate allowance. Petrol costs need verification (see below). It is also recommended that you keep receipts in respect of subsistence.
In performing your tax deduction non-chargeable expenses are deducted from your gross pay before calculating your tax. This means that you get reimbursed for part of your work tax and National Insurance free.
Download our Expenses Guide in the Help Section
- You can claim 45p a mile for the first 10,000 miles in a tax year and 25p thereafter. We do need receipts as evidence that you have had to purchase petrol. We need at least £1.62 of petrol receipts for every 10 miles of mileage claimed. To simplify this process it may be easier to obtain receipts for all petrol purchased and simply send them all in by post or email i.e. receipts don’t need to exactly match as long as they’re higher.
- If you are being reimbursed for your mileage you can claim against your tax the difference between the rate they are paying (if it is lower) and the above rates.
- You can claim 5p per mile for passengers in your car who also work for Cephas.
- You can also claim for parking, congestion and toll charges.
- The full cost of travelling on public transport (including first class travel) can be deducted but you need to keep the tax invoice.
- Motorbikes can claim 24p per mile and bicycles 20p per mile.
- Traveling to an interview cannot be deducted as an allowable expense.
- If you are staying in a hotel or B&B then reasonable food costs added to your bill can be deducted. If dinner and/or breakfast aren’t included you can claim for these provided you keep tax invoices.
- If you are staying in rented accommodation food costs can’t be claimed.
- If you are working longer than your contractual hours then you claim for food costs outside of your normal hours.
- Entertainment costs cannot be claimed
- One meal rate (Five hour rate) – A rate of up to £5.00 may be paid where the worker has been away from his home/normal place of work for a period of at least five hours and has incurred a cost on a meal.
- Two meal rate (Ten hour rate) – A rate of up to £10.00 may be paid where the worker has been away from his home/normal place of work for a period of at least ten hours and has incurred a cost on a meal or meals.
- Late evening meal rate (irregular late finishers only) – A rate of up to £15.00 may be paid where the employee has to work later than usual, finishes work after 8.00 pm having worked his normal day and has to buy a meal which he would usually have at home.
- If the employee is paid an allowance under the five or ten hour rule, the late meal allowance could still be paid if he finishes work after 8.00 pm and buys a meal that he would usually have at home. However, if the employee regularly finishes work late because, for example, he normally works the afternoon or evening shift, he would not be entitled to use the late evening meal rate.
- If the traveling time to your job is excessive (or it’s cheaper to stay overnight) then the full cost of hotels or renting a home can be deducted provided you keep tax receipts and you are not renting out your normal home while working away.
- You can also claim for additional council tax and gas/electric bills.
- Working from Home. Costs relating to working from home are rarely allowable as a deduction. You need to be working from home because you are required to and because you can’t do the same work at the clients premises. It also needs to be a separate part of your house that you would not use apart when working.
- If you stay with a friend reasonable contributions can be claimed (but they could be liable for tax on what they receive). We require details of costs you incur including who they were paid to.
- You can claim £5 per night if working away or £10 if overseas for Personal Incidental Expenses (PIE’s)
- Postage and Stationery
- Telephone calls
- Special or Protective Clothing, that is required for your job (and what you could not reasonably wear out of hours).
- Contribution to our Group pension scheme. Whatever payments are made to our Group Pension Scheme are tax deductible for PAYE and also reduce the amount of employee’s and employers National Insurance Contributions. The net benefit can be as much as 48% of the gross pension i.e. if your gross pension is £100, you pay £52 and the taxman pays £48.
- Equipment (Only the cost of equipment that is required for your current contract only can be used to reduce your tax liability).
- Professional subscriptions (The cost of fees and subscriptions to professional bodies or learned societies.)
- Eye test and Glasses/Contacts (The cost of eye test and glasses/contacts if your job requires the use of a computer.)
- Training costs and equipment (The training must be specific to the contract you are working on).
- Umbrella Company Fee. Strictly speaking Cephas do not charge a fee but deduct a margin from the funds you generate when calculating your commission due. There is no need to claim tax relief for this as it is deducted from your gross pay before tax.
- Details of your expenses claims need to be listed on your timesheet. Expenses relating to a temporary work place (i.e. travel and subsistence) mean that your contract cannot be for more than two years at the same end client (otherwise it is classed as a permanent work place). We help ensure you claim all the relief you are entitled to. We are always happy to answer any queries you have about Umbrella Company Expenses. If you have any queries please call your Account Manager.