Umbrella company business costs and expenses explained

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One of the benefits you’ll enjoy when working with Parasol is the ability to claim and be reimbursed for legitimate business costs and expenses – as long as they’re incurred during an assignment. The types of costs and expenses that can be claimed and reimbursed are dependent on the type of assignment you’re working on and whether it’s subject to supervision, direction or control (SDC).

The things you can claim for are determined by HMRC guidelines so all umbrella companies should follow the same process. The table below provides an overview of the costs and expenses you’ll be eligible to claim depending on the assignment. We’ve also provided a more detailed explanation of each item below:


Business costs and expenses in relation to a contractor's SDC status

Client billable expenses

These are pre-agreed with and paid by the end client or agency so must be approved by the end client or agency upfront before the expense occurs. In order to be paid tax and NIC free by Parasol, the client billable expense must be within one of the categories on the MyParasol portal.

Business costs

These types of costs are always paid tax and NIC free regardless of the type of assignment you are on and include electronic equipment, parking at or near the assignment, training & tuition costs and text books.

Electronic equipment

The costs of electrical equipment such as an iPad or laptop can be claimed for and reimbursed, provided they’re essential for the assignment. Software counts as well. There’s no limit to the amount that you can claim, as long as you detail how each purchase supports your role.


You can claim and be reimbursed for the cost of parking at or near the assignment.

Training and text books

It’s also possible to claim and be reimbursed for the costs of any courses or training that you complete and any text books that you need – provided it’s related to your role. If this is a requirement for the current assignment, there’s a good chance that the request will be accepted. Any non-work related qualifications aren’t eligible for reimbursement.


Mileage to and from the assignment and home can be claimed and reimbursed tax and NIC free if no SDC applies to the current assignment. Mileage rates apply to bicycles and motorcycles as well as cars and vans.

The table below outlines the current approved mileage allowance payments (AMAP) you can claim for.


Transport business costs and expenses

Business expenses

This covers things like business entertaining, stationery, safety equipment, travel, accommodation and subsistence. You’ll be able to apply for a tax refund from HMRC on these expenses after the end of the tax year (5th April) either via a self-assessment tax return or a P87 form. Parasol will help you with this by providing you with all the information HMRC will need, so long as you regularly log all of your expenses and upload receipts on the MyParasol portal so we can track and check them.

The amounts you may get refunded by HMRC can really add up so it’s definitely worth doing this.


To claim a tax refund on accommodation expenses, you’ll need to provide a scanned copy or picture of your receipt. If you’re seeking a tax refund on rental costs, the original, signed copy of the rental agreement will be needed.

Any rental accommodation claim needs to meet HMRC’s Dual Purpose rules – basically saying that you’re already maintaining a property while you’re renting the second one for the assignment. If you’re renting a property to live in during your working week and then returning to your main home at weekends, you can seek a tax refund on the full cost of renting the second property.


You can claim a tax refund on expenses for a range of different transport methods, including planes, trains and cars. What’s more, this could also include additional expenses such as rail/tube passes, taxi fares, road tolls and congestion charges.

A tax refund on reasonable car hire charges may also be recovered, provided the car was hired for business use. That means if you hire a car for seven days, but only work five, you can only claim for the amount of time you were on assignment, i.e 5/7. For Car Hire mileage, you can either claim the full 45p per mile and not for the rental costs or if claiming the rental costs reduced mileage rates will apply.

Remember, keep and upload all your receipts on the MyParasol portal so we can check and approve them. Speeding or parking fines can’t be claimed for, so please drive carefully!

Food and drink

You may also be able to claim a tax refund for any meals you buy while on assignment. They just need to be bought and consumed either on your way to or from work, or while at work. Buying food and drink the day before and eating it while at work doesn’t count.

If you keep your receipts and upload copies onto the MyParasol portal, there are no restrictions on the amount you can claim.


Although claiming for the odd bit of stationery may seem more effort than it’s worth, when you add together the cost of each item it really does make sense – think of the amount of pens you get through in a year! You can claim a tax refund for stationery and postage costs incurred for business purposes so long as you keep and upload copies of all your receipts onto the MyParasol portal.

Business entertaining

You can claim a tax refund for reasonable costs incurred when entertaining a business contact or client. Just submit these claims along with copies of receipts, details of the people you’re entertaining and the reason for the entertainment. Unfortunately, nights out with friends, family or work colleagues don’t count!

Safety equipment, professional subscriptions and phone call costs

You can claim a tax refund for all of these items as long as they’re relevant to the current assignment.

Need more help?

We hope this guide sheds some light on how easy and beneficial it is to claim and log legitimate business expenses and costs. If you need more information, please call 0800 458 0818 or email:

Based on the details of the assignment, it might be worth considering going limited. That way, as long as you’re outside IR35 you’ll still be able to claim all expenses tax and NIC free as and when you incur them. Our sister company ClearSky Contractor Accounting is the go-to provider for this. And if you aren’t sure whether this route is for you, simply give our best advice team a call on 0800 458 0818. They’ll be able to talk through your options based on your own circumstances.

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