Umbrella Tax Deductible Reimbursed Expenses

What is this about?

This guidance sets out the expenses policy applicable to employees of Brookson Solutions Limited.  The policy has been produced in line with legislation and HMRC guidance to ensure that all expenses processed are eligible for tax relief. 

 

What do I need to do?

Please ensure that all expense claims you submit to Brookson are claimed in line with this policy.  Claims may be rejected if they are for expenses not included in the policy.

You must complete the Control Questionnaire available on Connect for each assignment you undertake.  Failure to do this will mean that your expenses are not processed.  It is important that you complete this questionnaire to the best of your knowledge to ensure that the correct tax treatment is applied to your expenses.  Guidance on how to complete the Control Questionnaire and the factors to consider when completing it can be accessed from within the Questionnaire in Connect.

If we conclude that your pay rate, job title and the answers you provide to the Control Questionnaire confirm that you are not subject to the supervision, direction or control of the client over the manner in which your services are provided then you will be eligible to claim expenses.  We will reduce the amount of your taxable salary on receipt of any claims from you in relation to the expense types (set out in more detail below), providing that any expenses have been wholly, exclusively and necessarily incurred in the performance of your duties as an employee and meet the criteria set out in detail below for each expense type. 

We will also ask you to forward a letter to your client asking them to contact us if they disagree with our conclusion regarding you not being under supervision, direction or control.  If we receive evidence to the contrary from the end client we may cease to process expenses.  We will also contact you agency to ask them if they believe that you are under the supervision, direction or control of them or your client.  If we receive evidence from the end client confirming this we may cease to process expenses.

Finally, if during each assignment the working practices change we ask that you contact us to discuss this so we are able to reassess your status.

The guidance provided in this document is based on you not being under the supervision, direction or control (or the right of) of the end client or your agency and having completed the above steps to ensure we have evidence on file to prove this.

To claim expenses you must remember to complete the ‘Expense Claim Form’ on a weekly basis and attach all necessary receipts through Connect. Our Expenses Team will then process and validate legitimate expenditure and may need to contact you on occasion if more information is required.

 

General information

Income Tax relief can only be obtained through the payroll on appropriate expenses paid, that:

  • Are paid to you as an employee from Brookson Solutions Limited.
  • Are paid only from the funds you generate whilst working through Brookson Solutions Limited.
  • Relate to an expense claim submitted by you via Connect.
  • Relate to mileage, parking, training or the overnight allowance and meet the criteria explained in our expenses policy.

An amount equivalent to your income tax rate can be reclaimed on all other expenses incurred wholly, exclusively and necessary in the performance of your employment duties through the self-assessment tax return process after the end of the tax year.

 

The Brookson Expense Validation Process

There are many rules around the tax treatment of expenses reimbursed by an employer and specific rules for employees working under an over-arching contract of employment.

Brookson want you to make informed decisions on the expenses you choose to claim for reimbursement. Our expenses processing systems have been designed to give you the peace of mind that expenses reimbursed to you as an employee of Brookson Solutions Limited qualify as tax free under tax law and HMRC guidelines. Furthermore, that any claim would be defensible in the event of a HMRC challenge at a later date.

As a result of this strategy, Brookson has adopted the following policies:

  • We will assess the level of direction, supervision or control exercised by your agency/client over the work you undertake using your pay rate, job title and the questionnaire on Connect which is available to you whenever you change or commence a new assignment under our overarching employment contract.
  • If you pass the test above we will require you to provide a letter to your end client confirming the results of the test and asking them to let us know if they disagree with our conclusion that they do not (or have the right to) exercise any direction, supervision or control over the manner and performance of your services on the assignment.  We will also contact your recruitment agency to obtain evidence from regarding their view on whether you are subject to supervision, direction or control.
  • We will review your expense claims and provide advice as to which expenses can be reimbursed tax-free.
  • We will include only those expenses in your pay which are permitted (subject to a three day lead time for processing) and show them on your pay slip (this is limited to mileage, parking expenses, overnight allowance and attendance at work related training courses – see further guidance below for more information on these).
  • All other expenses will be stored up by us for use during the self-assessment tax return process in the event that you choose to reclaim income tax paid in relation to those expenses.
  • We ask you to provide us with receipts for all claims before we process or provide advice in relation to a claim.

Upon receipt of your expenses claim, we will:

  • Confirm that a receipt is included for all amounts claimed, and that we can identify the nature of each item of the claim.
  • Input the details on our system.
  • Contact you for further information before processing the claim, if there are items about which we are uncertain (where receipts are missing or which appear to not be tax-deductible).
  • Store the expense claims and receipts in case of a later query and/or for your self- assessment tax return where appropriate.

Types of expenses which can be claimed and the process for claiming each one

Due to changes in the law from the Finance Act 2015 and Finance Act 2016, expenses fall into two categories:

Category 1 expenses which can be reimbursed via our payroll throughout your employment;

Category 2 expenses which will be stored up to enable you to reclaim the income tax paid on them during the self-assessment tax return process after the end of the tax year.

Brookson can only reimburse expenses falling into category 1 through the payroll. These expenses are limited to mileage, training, parking and the overnight allowance and are clearly identified in this document.

This means that you need to make a claim for tax relief for all other expenses on your self-assessment tax return or P87. Again, these expenses are clearly identified in this document and all references to the self-assessment tax return in this document, also includes the P87 process where your expenses amount to less than £2,500.

In order to claim tax relief on each category of expenses it is important that both us and you have evidence to prove that you are not subject to the supervision, direction or control of your client in the manner in which you provide your services. 

Receipts should be attached to all claim forms for expenditure where it would be reasonably expected for you to have received one.  This is to ensure that you can provide the necessary information to HMRC when submitting your self-assessment tax return, or P87, or should they enquire into your personal tax affairs.

The guidance provided below is based on you not being under the supervision, direction or control (or the right of) of the end client or your agency and having completed the Brookson Control Questionnaire to ensure we have evidence on file to prove this.

 

1. Mileage

Tax relief is not normally available on travel costs relating to commuting to and from your normal place of work.  However, where you are able to demonstrate a commitment to work on more than one assignment with different worksites during your employment with Brookson it may be possible to claim mileage expenses (subject to the temporary work site rule, explained below).

However, if you expect only to work at a single location throughout your time as an employee of Brookson, this location will be regarded as a permanent workplace and expenses will not be allowable. You should not therefore submit a claim for travel costs if you only intend to work at a single site during your employment with Brookson.


Temporary worksite

HMRC specifies that travel to and from a temporary work site is an allowable expense.  A worksite qualifies as temporary if the period of time at the site is both expected to be:

  1. less than 24 months (including any time spent working on that site immediately prior to commencing your employment with Brookson), and
  2. in fact does not exceed 24 months.

If the contract is extended or is expected to be extended beyond 24 months, no further travel to and from the work site is allowable from the date of the extension as the work site would no longer qualify as temporary.

One exception to the above principle may arise where you spend 40% or less of your time at a workplace.  If this is the case, all expenses incurred in travelling to and from that site are allowed, regardless of the temporary worksite rule.  The claim may continue indefinitely for as long as circumstances continue to satisfy the 40% rule.


Final assignment during your employment

When you decide that a particular assignment will be your last as an employee of Brookson, from the point when that decision is reached, that workplace will no longer be a temporary workplace and you will no longer be able to claim travel and subsistence expenses.

If you are unclear whether you are able to claim for travel expenses, particularly if you are working on more than one work site, about to change your worksite or you spend short periods of time away from you main worksite please contact our Employee Relations Team on 0345 058 1555 or 01925 235 758 who will be able to provide further guidance relevant to your circumstances or email umbrellaexpenses@brookson.co.uk.

Assuming you are eligible to claim travel and subsistence expenses you may submit a claim for the following expenses:

 

2. Road Travel - Use of Private Vehicles

You may claim a cost per mile for allowable business journeys in your own vehicle.  The rates that may be claimed (which are with reference to the total business mileage done in a tax year and are in line with HMRC approved rates) are as follows:

Type of Vehicle First              10,000 miles                      10,000+ miles

Car                                        45p per mile                       25p per mile

Motorcycle                            24p per mile                       24p per mile

Bicycle                                  20p per mile                       20p per mile


Valid VAT receipts for fuel are required and must be sent with your claim.  Please also let us know the fuel type of the vehicle on the claim form. Mileage claims will be reimbursed through our payroll where appropriate.

 

3. Road Travel - Use of Hire Cars

The cost of a short-term hire car together with the actual cost of fuel is allowable, provided that the use of the hire car is necessary to the performance of the duties as an employee and the fuel claimed relates solely to business trips. This cost will not be reimbursed through the payroll, but it can be put on your self-assessment tax return.

The long-term lease or hire purchase payments made for the acquisition of a vehicle are not an allowable expense, whether or not the vehicle is used for business purposes.  The “costs of ownership” of a private vehicle used for business travel are already factored into the Allowable Mileage Rates stated above.

 

4. Rail or Air Travel

Tax relief on the cost of train or air fares for business-related journeys is allowable and should be claimed on your self-assessment tax return. Tax relief on additional costs such as excess baggage claims is also allowable if it is incurred in the performance of your duties and have no personal element and should also be claimed on your self-assessment tax return.

 

5. Other Travel Costs

Tax relief is also claimable on allowable travel costs include bridge, tunnel and road tolls, bus and taxi fares, car parking charges and congestion charges, provided that these expenses have been incurred on a business trip. Brookson will reimburse car parking charges through the payroll, but all other expenses listed in this category should be claimed on your self-assessment tax return in order for you to be reimbursed for any tax from HMRC.

 

6. Overseas Travel Costs

As with travel in the UK, the cost of overseas travel is allowable where you are obliged to incur the expense in the performance of your duties and the tax relief on this expense should be claimed on your self-assessment tax return.

Tax relief on travel insurance is also allowable provided it is in the performance of your employment duties overseas and should be claimed on your self-assessment tax return. The legislation makes specific reference to insurance for the provision of medical assistance abroad only.

Expenses in foreign currency should be converted to sterling when completing your expense claim.

 

7. Accommodation

Tax relief on the cost of hotel accommodation for nights spent away from home on business may be claimed on your self-assessment tax return.

Tax relief on the cost of maintaining a rental property may also be allowable provided that:

  • use of the property is necessary for employment purposes, and
  • a permanent residence is being maintained elsewhere within the UK where a regular pattern of commuting back to that residence is evident.

Where a rental property is not used exclusively for business purposes, tax relief on the proportion of costs relating to the period of private usage is not allowable.  In such cases it will be necessary to determine the appropriate split of private and business usage and claim only tax relief for the business use. 

If you are unsure of the tax position in relation to rental of a property, please contact the Brookson Employee Relation Team for further guidance.

This expense should be claimed on your self-assessment tax return, but may be subject to additional charge where there is a mix of use between business and personal.

 

8. Incidental Overnight Expenses Allowance

If you are staying overnight while either away on business or on work-related training you are entitled to claim an Incidental Overnight Expense Allowance to cover the cost of personal phone calls, newspapers, laundry etc.

There are two Incidental Overnight Expenses Allowance rates - £5 per night in the UK and £10 per night overseas (including Eire).  No receipts need be produced.  It is important to note that these allowances can ONLY be claimed in relation to an overnight stay (e.g. if an you travel on a business trip in the UK which lasts 5 days with 4 overnight stays, £20 can be claimed). This will be paid to you through the payroll.

 

9. Subsistence – overnight trips

You may be able to claim tax relief on the actual cost of any food and drink incurred in the course of the qualifying journey involving an overnight stay on your self-assessment tax return.  The food and drink must have been purchased after the journey commenced.  As a result of this rule you cannot put the cost of preparing a packed lunch on your self-assessment tax return.

If you have dined with work associates, only the proportion of the total cost paid by you and which relate to you may be put on your self-assessment tax return in order to claim the tax relief.  Similarly, reasonable costs of alcoholic beverages with a meal may be included on your self-assessment tax return.

Where you incur the cost of a meal overseas, appropriate identification and explanation of the receipts must be provided in English.

 

10. Subsistence

If you incur the cost of food and drink during travel to and from a temporary worksite (see section 1 for definition of a temporary work site) you may claim tax relief on the actual costs incurred via your self-assessment tax return, (please ensure you provide a receipt with the claim form). 

 

11. Business Entertainment

You cannot claim the cost of entertaining clients, colleagues or anyone else.

 

12. Tools and Equipment

You can claim tax relief on the cost of low value (under £200) items of tools and equipment on your self-assessment tax return; however, you cannot claim tax relief on tools or equipment which cost more than £200. These expenses must be wholly necessary to your role i.e. all employees undertaking the role must be required to purchase the tools and equipment.

 

13. Protective Clothing

You may claim tax relief on the cost of replacement protective clothing and safety equipment e.g. boots,
hard hats, high visibility jackets, overalls, ear defenders, goggles or protective gloves if these are necessary to do your job. Again, this is done on your self-assessment tax return.  Similarly, you may also make a claim tax relief on the cost of cleaning these items through your self-assessment tax return. 

 

14. Stationery, Postage, Fax etc.

You may claim tax relief on the cost of stationery, postage, sending and receiving faxes, printing, photocopying etc if these are wholly, exclusively and necessarily incurred in the performance of your duties. This is also claimed via your self-assessment tax return.  These expenses must be wholly necessary to your role i.e. all employees undertaking the role must be required to purchase the tools and equipment.

 

15. Home Telephone & Mobile Phones

You may claim tax relief on the cost of business calls made from your home telephone or mobile phone, again on your self-assessment tax return.  If the phone is solely used for work purposes you can claim tax relief on the full cost.

If the phone is used for a mixture of business and personal you can only claim tax relief on the cost relating to the business calls (no element of the line rental can be claimed).  Please provide an itemized bill or analysis of calls made (if an itemized bill cannot be obtained e.g. for a mobile top up) with your claim form.

 

16. Subscriptions to Professional Bodies

You may claim tax relief on the cost of the annual subscriptions paid to professional bodies on your self-assessment tax return providing the professional body appears on HMRC’s list of approved bodies https://www.gov.uk/government/publications/professional-bodies-approved-for-tax-relief-list-3 .  Please note, if you have previously asked HMRC to include an allowance in your tax code for this expense you should ensure that you claim it again on your self-assessment tax return.

 

17. Training

Training costs are allowable only to the extent where the training expense is an integral part of the duties of employment and will be reimbursed to you through our payroll.

 

18. Eye tests (for VDU users)

You can claim tax relief on the cost of a sight test, glasses and contact lenses every 2 years on your self-assessment tax return, providing that your role requires you to wear glasses for VDU use and the prescription states this fact. Please provide a copy of your prescription with your claim form.

 

19. Incidentals / Sundry Expenses

Tax relief on other expenses not specifically included in any of the other captions may be allowable, depending on individual circumstances and subject to them being incurred wholly, exclusively and necessarily in the performance of your employment duties. Such expenses should be noted on your self-assessment tax return.

 

20. Agency / client expenses

Please note, if the agency or client includes the reimbursement of any expenses in the payment to Brookson this will be subject to tax and national insurance when paid to you.  As a result, if any of the expenses that are claimed from the agency meet the terms of this expenses policy you should also ensure that you claim them on the Brookson claim form.  This is to ensure that you receive tax relief on these expenses through our payroll where possible, or they can be included on your self-assessment tax return.

 

21. Completing the Brookson claim form

You can make a claim for the tax relief on the expenses detailed in this policy by submitting a claim form to Brookson.  Claims should be submitted via the claim form in Connect.  Where appropriate, we will reimburse expenses through our payroll to enable you to receive tax relief at source. However, not all expenses can be paid this way and you will need to claim the tax relief on your self-assessment tax return (or P87 where the value of your expenses falls below £2500).

 

22. Completing your self-assessment tax return

If you are employed with us during the course of your assignment when these expenses are incurred, provide us with details of those expenses as they are incurred and continue to be employed when a self-assessment tax return can be completed, we will be happy to support you in completing and filing a self-assessment tax return with HMRC or a P87 if this is more appropriate, in order for you to reclaim tax on your expenses.  Our tax return service is subject to terms and conditions which will be issued to you following the end of the tax year.

Should you require any further explanation or clarification on any items included in this expenses policy please contact our Employee Relations Team on 0345 058 1555 or 01925 235 758 or email umbrellaexpenses@brookson.co.uk.

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