Expenses with an umbrella, with IR35 postponed. Expenses with an umbrella, with IR35 postponed.
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  1. #1

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    Default Expenses with an umbrella, with IR35 postponed.

    Hi,

    I am pretty sure all expenses for when in an umbrella were to be scrapped with the IR35 rules. However with the rules now postponed are there any allowable expenses for tax purposes?
    Such as travel or accommodation costs.
    What if I am not subject to SDC?

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    Quote Originally Posted by abz2020 View Post
    Hi,

    I am pretty sure all expenses for when in an umbrella were to be scrapped with the IR35 rules. However with the rules now postponed are there any allowable expenses for tax purposes?
    Such as travel or accommodation costs.
    What if I am not subject to SDC?
    The rules have not been scrapped. Reforms to how they have been applied have been delayed. The rules are still the same.

    Your answer is still no.
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    Quote Originally Posted by northernladuk View Post
    The rules have not been scrapped. Reforms to how they have been applied have been delayed. The rules are still the same.

    Your answer is still no.
    I didnt say rules were scrapped. What are the rules exactly? Any source, never been via umbrella before.

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    Quote Originally Posted by abz2020 View Post
    I didnt say rules were scrapped. What are the rules exactly? Any source, never been via umbrella before.
    Google is your friend. If you've already signed up with a brolly then they are also a good port of call.

    We do also have a part of the forum dedicated to umbrella questions.

    https://www.contractoruk.com/forums/umbrella-companies/
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    You're getting confused with different things.

    As NLUK says, the IR35 rules have not changed. However if you are using an umbrella, IR35 doesn't matter, but SDC does.

    If you are subject to SDC by the end client or any intermediary other than YourCo then you don't get expenses for anything other than occasional off-site travel at the client's request(or, given SDC, demand...).

    If you are not under SDC then you normal business expenses apply. However, as an employee of hte umbrella, what those expenses are and to what level are whatever the umbrella says it is.

    And to be clear, it's the tax that's allowable, not the cost. The umbrella will (or damned well should) deduct the expenses from your day rate less their fees before doing the tax calculation, so in effect the expenses are tax free and not a BIK.

    But, as has been said, you're paying the umbrella to do all this stuff, so ask them for the details.
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    Quote Originally Posted by malvolio View Post
    You're getting confused with different things.

    As NLUK says, the IR35 rules have not changed. However if you are using an umbrella, IR35 doesn't matter, but SDC does.

    If you are subject to SDC by the end client or any intermediary other than YourCo then you don't get expenses for anything other than occasional off-site travel at the client's request(or, given SDC, demand...).

    If you are not under SDC then you normal business expenses apply. However, as an employee of hte umbrella, what those expenses are and to what level are whatever the umbrella says it is.

    And to be clear, it's the tax that's allowable, not the cost. The umbrella will (or damned well should) deduct the expenses from your day rate less their fees before doing the tax calculation, so in effect the expenses are tax free and not a BIK.

    But, as has been said, you're paying the umbrella to do all this stuff, so ask them for the details.
    No IR35 matters for expenses - it trumps the SDC requirement which is only for outside IR35 contracts:-

    From https://www.qdoscontractor.com/news/...ng-inside-ir35

    However, recently enforced changes to travel and subsistence (T&S) allowances mean that contractors working inside IR35 should not claim on everyday expenses such as travel, mileage, hotels and meals. HMRC are hot on this, and will reclassify this as earnings, meaning that you will be forced to pay tax and NIC on any incorrectly claimed T&S expenses.
    For an umbrella the rules are:
    Inside IR35 - no expenses allowed
    Outside IR35 - expenses allowed provided SDC rules are met.

    So with the IR35 changes postponed for a year, you could in theory claim expenses....
    Last edited by eek; 19th March 2020 at 14:38.
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    Quote Originally Posted by eek View Post
    No IR35 matters for expenses - it trumps the SDC requirement which is only for outside IR35 contracts:-

    From Which expenses can contractors claim when working inside IR35?



    For an umbrella the rules are:
    Inside IR35 - no expenses allowed
    Outside IR35 - expenses allowed provided SDC rules are met.

    So with the IR35 changes postponed for a year, you could in theory claim expenses....
    OK, but to be fair, as I understand the SDC criteria, you would be pushed to fail them and still be safely outside IR35. No matter, the OP has to ask his umbrella since he is bound by their rules.
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    Quote Originally Posted by malvolio View Post
    You're getting confused with different things.

    As NLUK says, the IR35 rules have not changed. However if you are using an umbrella, IR35 doesn't matter, but SDC does.

    If you are subject to SDC by the end client or any intermediary other than YourCo then you don't get expenses for anything other than occasional off-site travel at the client's request(or, given SDC, demand...).

    If you are not under SDC then you normal business expenses apply. However, as an employee of hte umbrella, what those expenses are and to what level are whatever the umbrella says it is.

    And to be clear, it's the tax that's allowable, not the cost. The umbrella will (or damned well should) deduct the expenses from your day rate less their fees before doing the tax calculation, so in effect the expenses are tax free and not a BIK.

    But, as has been said, you're paying the umbrella to do all this stuff, so ask them for the details.
    Thanks for that. Still havent joined brolly. They sent me tax breakdown and it seems legit, all taxes and NICs are there.

    It was mentioned by the umbrella that I will not be under SDC, and some expenses will be claimable for tax relief.

    I thought all kind of expenses were scrapped when with brolly, hence asking.

    PS. Inside or outside is not determined, client wont accept PSCs.
    Last edited by abz2020; 19th March 2020 at 15:15.

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