A Contractors Basic Guide To Expenses

Being involved in temporary employment, regardless of the industry will involve the ability to claim expenses during all of your contracts. This involves the contractor paying for the expenses, whether it be for travel or food. And then once the contract has finished the company hiring the contractors will reimburse those who had to pay for the travel etc... Of course if you are new to contracting and temporary work in general, then its advised to speak to an accountant or professional to make the law and rules clear. Before expecting to claim back expenses that are not covered. This guide is a very basic overview of the options available and the procedures that are followed. First and foremost, expenses are not taxed. Therefore this will not affect your tax bill. But its important to remember that there must be physical evidence where applicable for each of the expenses. Keeping records is a common activity for contractors, to ensure of any chance of the HMRC wanting to check everything. Also, keeping records can help provide proof to the employer if required. So when working through your own limited company, contractors will be able to claim the following: Accommodation When a hotel or B&B is required in order to carry out the work, this can be claimed as expenses. It's important that the cost of such accommodation is considered reasonable. Otherwise the claim could be denied for unnecessary extravagance. Travel Expenses Again, when working conditions are in remote locations, this will require additional travel. That at times could prove quite expensive if not originally planned. In these sceneries there are prices that can be calculated to and from the work location. Mileage rates are around 45p per mile, for the first 10,000 miles, in any year and then 25p each year after. This is provided to cover the fuel and running costs of using a vehicle as the form of transport. This includes parking fees and congestion charges also. The ability to claim when using any form of public transport, also exists. Clothing Clothing can also be claimed as an expense. On the condition it is unique to that specific contract. For example the requirement of steel toe capped boots may be a requirement within many different working conditions. Food Allowance When working in a remote locations, it is possible to claim expenses on meals. Training When training plays an essential role to help a contractor complete their duties, then only in this circumstance can this be claimed as an expense. It's vital that no claim for any expenses that were not made, are put through. When doing so each individual becomes liable for the un-paid taxes and not the company. Again, speaking to an accountant or professional in this area is always advised. 24 Month Rule Contractors must also be aware of the 24 month contractor expenses rule. This legislation details that each and every contractor is entitled to claiming travel expenses, this includes the travelling to and from the place of work up until this contract has been in place for longer than 24 months. Therefore, travel expenses are only considered a taxable expense within the 24 month rule.

Harvey McEwan provides information and advice on a variety of areas from the contractor expenses to choosing the right umbrella company. View Harvey's other articles to find out more.