Tax and Expenses - What You Should Know

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It's no surprise that the question of take-home pay, and how it's affected by expenses policies, tax regulations, and employer's "dispensation", is usually uppermost in the mind of the contractor looking for a tax efficient and compliant umbrella solution

Please take the time to read the rest of this page - it could save you a lot of hassle

Remember that you're perfectly entitled to claim a whole range of expenses incurred as a contractor (we'll help you make sure you get these) but, unfortunately, what should be simple is often made complicated by widely differing, and sometimes very risky interpretations.

Let's look at the features of an umbrella company expenses dispensation from a tax perspective:

  • 1A dispensation is a paper saving administrative convenience for employers and the revenue, not an opportunity to make money on expenses.
  • 2Even if you don't need to supply a receipt to make a claim, you still need to keep some evidence that the claim is legitimate, because HMRC can come and check your claims at any time
  • 3While, as we said above, you're entitled as a contractor to a whole range of tax-efficient legitimate expenses, claims that aren't supported by receipts, other than for trivial items, are invariably interpreted as taxable by HMRC.
  • 4The Taxman will diligently pursue you, the contractor - and not your umbrella company - in cases of unsupported or dubious expense claims

So, if your umbrella company is rigorous in always asking for receipts, remember they're only looking after your interests.

See Expenses Dispensations Explained for your guide to claiming expenses at Drole

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