Umbrella Company travel expenses - overview
When contracting through an Umbrella Company, mileage and general travel expenses can be allowable, according to a new guide from respected umbrella company Contractor Umbrella.
The guide says: "You can claim the cost of travel to and from your temporary place of work. Mileage rates are 45p per mile for the first 10,000 miles in any fiscal year and then 25p per mile thereafter. This allowance is to cover fuel and running costs of the vehicle. If you are travelling to work as a passenger in a car you are entitled to claim 5p per mile. You can also claim for parking and congestion charges but you may not claim for parking fines or speeding fines. The cost of travel by public transport can be claimed but you must have a valid receipt. A mileage allowance can also be claimed for travel by motorcycle and bicycle at rates of 24p per mile and 20p per mile respectively”.
Some umbrella companies may discuss “dispensations”. A dispensation is simply a working agreement between a company and HMRC. It is a cost saving mechanism for HMRC that helps them reduce the number of tax inspectors. Therefore, explains CU's guide, it is a means of reducing HMRC paperwork by estimating the value of multiple small transactions rather spending time analysing each small item.
As the guide's authors say, it is important to keep receipts for your travel expenses or a record of any journeys. When claiming travel expenses it is advisable that you keep a note of the dates, reason, locations mileage, type of transport etc. Basically a record of travel will provide supporting evidence if required at a later stage. This mileage log and guidance on the log may help.
Remember though, the guide points out, it is the contractor who will be liable should HMRC decide, for instance, that expenses have been incorrectly claimed!
Editor's Note: For more information, please visit the main section on contractor expenses.