'tax deductible expenses' - quick question.

scheming_gypsy

Reet... for the past few years i've been contracting, and using an umbrella company. So like all other contractors i've been sticking my expenses in and getting the tax benefits on it, but i'm just about to hit a possible problem.

my current contract is supposed to end tomorrow but one of the companies i'm working through wants me to move over onto another project starting tomorrow.... which is fair enough BUT ! it's based a lot further away which means more mileage and then there'll be travelling from site to site. My current contract is a low rate compared to what i normally work for but according to my umbrella company's wage calculator, it maxes out at 414 miles.
So if i put 414 miles in, it gives a wage of £451 and if i put 900 miles in, it maxes out at £451.

So the two questions are:
1 - what happens with the additional 'money'? i'm guessing that you can only claim so many expenses without taking yourself into minus figures and you won't pay tax and NI.. so it has to be capped.
Does the 'extra' sit to one side and wait until it can be claimed; ie on the next contract or do you just lose it?

2 - if i'm travelling in the role using my own transport, i'm guessing i claim that back through the agency rather than the umbrella company.


cheers

InsideInsurance

1) It is a tax releaf and so if youre not paying enough tax for the amount of relief your due I assume the rest is just "lost" - you umbrella should tell you this though

2) Depends on the wording of the contract between all the parties. Again will need to check if you can claim both expenses and mileage - haven't ever personally used an umbrella for my contracting as have been able to be outside of IR35

scheming_gypsy

Cheers, i've not had chance to speak to the umbrella company yet as it's not all confirmed, it was mentioned yesterday and then an email earlier asking if i can start tomorrow...

The tax one is a bit shoite if it does all get lost as I could end up spending a fortune in petrol and completely defeat the object of taking the contract. Hopefully though it's just the training that's so far away

SteProud

In addition to the expenses that you can offset against your tax liability, there are also rechargeable expenses, ie. pre-agreed with your agency that you will be reimbursed for. The extra travel might fall in to this catergory.

Your umbrella should be able to take you through this.

scheming_gypsy

Well it turns out the company pay mileage, but only at 20p a mile which is absolutely gash. I've asked if they can review it seeing as it costs almost that in petrol (cost me £15 to do 94.5 motorway miles) so it looks like it's going to be a case of claiming for everything possible and no speeding so i don't get there within the time allowance.....

KiKi

InsideInsurance wrote: »

haven't ever personally used an umbrella for my contracting as have been able to be outside of IR35

OT, but you can still use umbrellas outside of IR35. I've worked for companies who won't accept me on a contract as a sole trader, so I've worked through an umbrella, but still outside of IR35.