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How do I claim Umbrella Company Expenses via SA?

Looking for confirmation on my thoughts

My client has been told via his umbrella company that he is to claim his expenses via SA, they do not pay them?  Apparently they are inside the IR35 so this is not an issue. I am right that if the umbrella company (client) confirm this then all is OK in this horrific area of tax?

Looking at what I can find on HMRC it appears I can submit a P87 or claim for his expenses via Self Assessment under the Employment Expenses Page following the usual rules of what can be claimed as an expenses when employed.

Is my thinking correct?  Can it be that simple with all this minefield to go through with umbrella companies, SDC and IR35's??


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07th Dec 2017 22:13

IR35 is irrelevant if he is an employee of an umbrella company.

You can either complete a P87/tax return for expenses incurred wholly, exclusively, and necessarily as a job holder and the employee was obliged to incur the expense. This is a very difficult test to pass.

Assuming the end client/hirer had to right to SDC the umbrella worker expenses such as a travel and subsistence will not be claimable as the workplace will not be considered temporary.

Given how strict HMRC are with employment expenses expect a HMRC investigation after submitting the P87/tax return. Therefore make sure you have receipts and make sure each expense passes all the relevant tax tests (WEN, SDC, etc).

It is worth noting the umbrella company are probably just pushing the responsibility of claiming tax relief away from themselves in order to avoid a HMRC investigation, i.e. if the employee claims the tax relief on their tax return it is their problem (and not the umbrella's).

Thanks (2)
to GR
08th Dec 2017 07:48

After doing yet more investigation I have come to the same conclusion that the umbrella company wants to move the expenses claim responsibility onto my client too. They have told him he doesn't need to do SDC test with them. I've told him he must do one. Hopefully this will clear any grey areas.

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