What business expenses can public sector contractors claim?

What business expenses can public sector contractors claim?

May 08, 2017

If you’re a contractor in the public sector then you will be affected by new rules which came into effect on 6th April.  The changes to off-payroll working mean that your work status under HMRCs IR35 legislation will be determined by the client and not you as was the case pre April 2017.

If your client deems that IR35 does apply to you then your tax and National Insurance must be deducted at source as if you were an employee, so if you currently contract through a limited company, you will have more tax to pay.  The other impact relates to business expenses.

If you contract for a healthcare organisation through your own limited company, you may no longer be able to claim tax relief on business-related costs and expenses.  However, if you contract for a healthcare organisation through an umbrella company, like Umbrella Plus, you may be able to claim tax relief on business-related costs and expenses by submitting an annual P87 claim to HMRC. Our accounting team can advise and assist you on this process. If you would like to talk to us about this please contact us on 01244 684700 or email [email protected]

The rules around business-related expenses can be complex and are an important consideration when deciding which working option is right for you. If you choose to work for an umbrella company, HMRC offers strict guidance on what does and does not constitute a legitimate business expense and it’s important to understand the rules so that you remain compliant.

HMRC’s rules state that contractors in the healthcare sector may be able to claim for the following:

  • Uniforms and work clothing – cleaning, repairing or replacing specialist clothing such as uniform or safety wear.
  • Business mileage or fuel – you can make a claim for business-related mileage or fuel for specific work-related trips, the amount of the claim will depend on whether you are using your own car or a company car. Your right to claim also depends on whether you are subject to SDC.  It’s important to note that you cannot claim for journeys to and from your permanent place of work.
  • Travel and overnight expenses such as public transport, hotel accommodation, food and drink, congestion charges and tolls, parking fees, business phone calls and administrative costs such as photocopying.
  • Professional fees and subscriptions – these may be claimed if membership is required for your role, or helpful in fulfilling your role.
  • Training – you may be able to claim for costs incurred in training and attendance of courses related to your assignment.

Please note that when claiming for business costs and expenses it’s important to have kept copies of all receipts and that these are submitted with your annual P87 claim.

We appreciate the rules around business costs and expenses can be complex.  Our team of specialist contractor accountants will be happy to provide more information or answer any specific queries you may have.  Please get in touch with a member of our team today.

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