Claiming expenses with Parasol's
PAYE tax calculator
As a contractor it can be a bit of a minefield trying to figure out what you can and can’t legitimately claim as expenses. For instance, if you’re buying a new all-singing-all-dancing laptop, is it pushing the mark to claim for that?
The answer is, at Parasol, we know it’s perfectly legit to claim for hardware under what’s called sundry office expenses plus we have the know-how to help you identify absolutely all the expenses you’re entitled to claim for.
And, unlike some less reputable umbrella companies, we simply don’t believe in encouraging our contractor employees to exploit grey areas in the system because, as we’ve said before, the taxman is no fool and will just introduce legislation to stop specific contractor ‘perks’ if they’re being abused. The taxman can also demand that you pay back any non-genuine claims quicker than you can say ‘put-it-on expenses’, so it’s really not worth the risk to your livelihood or reputation.
To find out what your take-home pay as a Parasol contractor employee could be, after you’ve offset your expenses against your taxable pay, and tax and NI have been accounted for, use our PAYE tax calculator. In the meantime, here’s the legitimate and above-board expense claims we’ll happily help you with:
To ensure expense claims are processed and paid as quickly as possible, you need to make sure of the following:
- All claims are for expenses incurred wholly, exclusively and necessarily in performing your business duties.
- You only make one claim per calendar month and only include expenses incurred during that month (i.e. June items entered in June claim only). Once approved, further items can’t be added.
- You don’t claim for expenses incurred prior to joining Parasol.
- You don’t submit any travel and subsistence related claims for any one place you have worked, or know you will work, for more than 2 years.
- You don’t submit any travel and subsistence related claims if your first assignment is the only assignment you expect to take as an employee of Parasol.
- You always submit all the necessary documentation associated with any particular claim, such as a signed cover sheet and receipts for items which require them.
- Where receipts are required, you must send the originals (not photocopies) as without these you cannot be paid.
When a contract ends, we’ll use the highest amount of available business expenses against your last payment. Any remaining receipts, where the claim is part used will be held for future contracts. Fully unused approved claims will have original receipts returned upon request allowing you to claim the outstanding expenses via Self Assessment or P87.
You can currently claim 40p per mile for the first 10,000 business miles you do in your car each year and then 25p per mile after that. This mileage includes travelling to and from temporary locations and between different sites. Of course, you need to get valid VAT receipts for fuel and these must be sent to us with your claim each month. When you submit your claim online, a mileage claim sheet will be displayed. You just need to print this, attach your fuel receipts to it and then send it to us at Parasol.
You’ve got to eat! So, while working at a temporary location, you can claim any meal and drink costs including:
- Up to £5 meal allowance when travelling to your temporary place of work before 7am
- Plus up to £5 meal allowance when working over 5 hours (max £10)
- Or up to £15 meal allowance when working more than 10 hours (max £20)
This subsistence allowance is intended to reimburse you for the actual costs incurred during working hours. If you claim over £20 in a day, a receipt must be provided. Plus additional overnight subsistence claims can be made, again with a receipt. Alternatively, up to £25 may be claimed for food and drink without a receipt, if one is provided for the cost of the accommodation (claimed under general expenses).
There are several categories for submitting accommodation costs, here’s how they all stack up:
Accommodation under £45 may be claimed without submitting receipts. However, if you’re audited by HMRC, you must be able to produce them at this point – so keep hold of them.
All accommodation over £45 must be accompanied by an original receipt, a stat won’t do.
If you’re claiming accommodation rental costs, your rental agreement must be the original, signed copy and meet HMRC Dual Purpose rules, stating that you’re only claiming for the working week.
If you’re staying with family and friends during the working week you can claim £25 per night Friends and Family Allowance. To substantiate this you must enter details of the person you are staying with online and their home must be more than 20 miles from your registered address.
In addition to the accommodation, you may also claim a further £5 for personal incidental expenses such as toiletries or £10 outside of the UK.
You can claim for the reasonable cost incurred when entertaining a business connection from an outside organisation during a genuine business occasion. Night outs with friends or family members cannot, repeat cannot, be claimed! You’ll also need to give full details of the reason for entertaining and the names of all the people in the party must be provided on the online claim form.
Reasonable car hire charges can be claimed when used solely for business during the working week; this is limited to 5/7ths of the cost. Original receipts must be provided and speeding, parking or clamping fines cannot be claimed. The maximum car hire period allowed is 6 months and this must be covered by your contract.
Parking can be claimed as long as an original receipt detailing date and cost is available for each date claimed.
Fare costs to and from your home and temporary place of work can be claimed where receipts are provided. For low cost flights, both original tickets and online receipts are acceptable.
Any training or tuition to do with your current work or future employment with Parasol can be claimed as long as you supply: a receipt for the full amount, your current job description, the name of the training course/tuition and a description of the training course/tuition. For more info on this subject contact:members@parasolgroup.co.uk.
A reasonable amount may be claimed for the cost of manuals and text books required for business purposes - receipts required.
A VDU eye test (up to the cost of £15) may be claimed as long as a receipt is provided.
For details of allowable subscriptions visit www.hmrc.gov.uk/list3
The costs of hardware, software and personal protection equipment essential to your role can be claimed. There’s no limit to the amount that can be claimed, although you must complete the sundry letter provided detailing how each purchase supports your role, along with the original receipt. Claiming the full cost of any purchase requires a security deposit* equivalent to 10% of the purchase price to be paid. The equipment will become the property of Parasol, with the option to purchase it after a qualifying period at a second-hand value assumed to be equal to 10% of the purchase price.
* The 10% deposit will deducted from your subsequent payment following your authorisation.
Anything you need to post to us here at Parasol can be claimed for, again original receipts must be provided.
Any office consumables (printer ink, pens etc) and stationery you use for business may be claimed. This total cost must be for a reasonable amount and you’ll need original receipts to validate your claim.
Itemised business calls from home, a personal mobile, or a public call box are fully claimable, while unfortunately private calls or line rental costs are not. To claim business calls a copy of your itemised telephone bill is required. Internet / ADSL subscriptions cannot be claimed.
Road / bridge tolls, tunnel fares and congestion charges incurred while on business may be claimed. Original receipts are required for all items except toll fees as such expenses are subject to extensive audit.
Although receipts aren’t needed for some claimable items, the HMRC stipulate that we audit a selection each month. So, if your claim is selected for audit, you’ll need to provide the necessary receipts to us otherwise we have to forward the details to HMRC for further investigation. So, it’s always worth getting receipts – and it’s always worth hanging onto them. It’s also worth noting that you’d be personally responsible for any underpayment of tax or NI resulting from an invalid claim and that the reimbursement of these underpayments would be due immediately and collected at the first opportunity.
