Expenses and Umbrella Services
When expenses are processed for an employee either by reimbursing the employee or paid by the employer in respect of the employee any that are not covered by the relevant exemptions in the legislation, up until 5 April 2016 must have been recorded on a form called a P11D. Receipts must be available in support of all expenses.
With effect from 6 April 2016 any taxable expenses or those that are a mixture of allowable and taxable must be paid with tax and NIC accounted for. The employee will then have to make claim for the element of allowable expenses.
All contractor’s receipts must also be retained. It is not an indication of the expenses that contractors’ are entitled to claim. To claim an expense you must have first incurred the cost and it must be ‘’wholly, exclusively and necessarily’’ incurred in the performance of your job.
All expenses are typically submitted to the umbrella in accordance with a schedule. All expenses incurred must be supported by original receipts. If the contractor does not actually incur an expense then no cost can be claimed. HMRC require that receipts are kept for a period of up to 5 years. The only expense where a receipt is not necessary relates to the overnight incidental expenses. HMRC allows up to £5 per night for stays in the UK and up to £10 for each night, any part of which is spent outside the UK where required to be away from home during the course of an assignment.