Expenses – What you can claim

Offsetting against tax

The golden rule is that an expense must be wholly, exclusively andnecessarily incurred as part of carrying out your duties, in order to be offset against your tax bill.

Business Travel

The most likely expense you will have is travelling to temporary workplaces. In simple terms, so long as you don’t expect to be working at the same place for 24 months or more, you can claim 25p per mile for each mile travelled using private transport, including a bicycle. This is increased to 40p per mile for the first 10,000 miles travelled each year.

If you travel by public transport, you can claim the full cost, providing it’s reasonable. First class rail travel and air fares are reasonable in most cases, but using a chauffeur and limousine would not be reasonable for all but the highest earners. Just remember, you have to spend the money before you can claim it.

On top of travel, on days you’re working at a temporary workplace, you can spend up to £5 a day on lunch, and claim the amount you spent from us. If you’re away from home for ten hours or more you can also claim up to £10 for an evening meal. If you stay overnight you can claim the actual cost of your accommodation plus up to £5 for incidental expenses.

Telephones

You can claim the cost of your business calls, or, with some mobile contracts, the proportion of the cost of ‘inclusive minutes’ that represents business calls.

What else can I claim against tax?

If you’ve genuinely incurred a cost wholly, exclusively andnecessarily to perform your duties, there is a reasonable chance it will be allowed. Further details are contained in our Employee Handbook which you’ll receive when you join us. Simply add the item to your expenses claim form. When we review the claim, we will either disallow it and let you know, or pay it without deducting tax.

Charging the client

Sometimes, the client will ask you to work at a different location and agree to pay your travel costs. If you pay up front and claim the cost through us, we will invoice the client and use the money to pay you. In fact, anything that the client agrees to pay for can be claimed from us. It will be charged on our invoice to the client and the money will be used to pay you.

In general, this means if the client sends you to another office and agrees to meet the cost of your travel, you’re absolutely fine. No tax will be deducted from the expenses and you’ll be reimbursed in full.

But there are times when tax will be deducted from the expenses paid to us by the client, and you need to understand why to avoid nasty surprises.

Business travel costs will almost always be allowable. The most common exception is if you combine the business travel with a holiday. In this case, the cost is not exclusively in relation to business, and that means it can’t be offset against tax.

Whenever the cost is not allowable, we are required to treat any money received from the client as earned income. This means you’ll be taxed on it, and you won’t get back what you originally spent.

The golden rule is that an expense must be wholly, exclusively andnecessarily incurred as part of carrying out your duties, in order to be offset against your tax bill.