When you’re employed and paid by a UK Umbrella company such as Exceed Contracting, navigating expense claims can seem challenging.
Understanding which expenses you can offset, claim as reimbursements, or should declare at the end of the tax year, is key to ensuring you’re managing your finances effectively AND remaining HMRC-compliant.
In this article we explain the three ways in which your expenses can be claimed through Exceed Contracting (as stipulated by HMRC), but if there’s anything you’re still unsure about, please Contact Us.
Three types of expense claims are available to UK Umbrella company employees
1. Offsetable Expenses: Business Mileage
Business mileage is the only expense that HMRC currently permits to be offset against your taxable income whilst working for a UK Umbrella company such as Exceed Contracting.
To qualify as business mileage, each journey must be necessary for work purposes.
Under HRMCs rules, commuting between your home and your primary workplace does NOT qualify as business mileage.
HMRC Approved Mileage Rates
- Car or van: 45p per mile for the first 10,000 miles, 25p per mile thereafter
- Motorcycles: 24p per mile
- Bicycles: 20p per mile
Exceed Contracting provides an Online Portal and a Step-By-Step Guide for Submitting Business Mileage Claims to help you accurately log your journeys.
Make sure you keep detailed records of your journeys, including postcodes for the origins and destinations, dates, and purpose, and submit your mileage claims to Exceed Contracting on a weekly basis (Monday to Sunday).
Useful HMRC Articles
- Mileage and Fuel Rates and Allowances
- When Travel Qualifies for Tax Relief
- Ordinary Commuting and Private Travel
2. Reimbursable Expenses: HMRC-Approved Costs
If your recruitment agency or end client is paying you back for expenses you have incurred, HMRC allows certain expenses to be reimbursed without income tax and NI being deducted.
These expenses must be wholly, exclusively, and necessarily incurred for your work.
Examples include:
- Accommodation, if you are required to work away from home
- Travel, such as bus/taxi fares, train tickets, flights/ferries, congestion/toll charges, parking
- Training, if you need to undertake specific training to do the job
To ensure you receive the full reimbursed amount without payroll deductions, you must log each expense claim and submit a valid receipt/evidence directly to Exceed Contracting via our Online Portal, even if you have already sent your receipts to your agency or client.
Our payroll team will help ensure that all your non-taxable expense submissions meet HMRC requirements to avoid future challenges.
Please ask for a copy of our Step-By-Step Guide to Submitting Reimbursable Expense Claims.
3. End-of-Year Declarations: P87 or Self-Assessment
If you’ve incurred additional expenses that haven’t been reimbursed or offset through your Umbrella company, you may be eligible to claim tax relief with HMRC at the end of the tax year.
This is suitable for claiming:
- Mileage costs above HMRC’s approved rates
- Accommodation and other travel costs
- Professional fees or subscriptions not reimbursed by your employer
These expenses can be submitted via two different methods:
1/ P87 Form
If your allowable expenses are £2,500 or less for the tax year, and you aren’t already completing a Self-Assessment tax return, you can claim Income Tax relief by posting a completed P87 Form to HMRC along with evidence of your expenses.
2/ Self-Assessment Tax Return
If your expense claim is for more than £2,500, or you’re already filing a Self-Assessment tax return, you should include your expenses in the relevant sections of your return.
Useful HMRC Articles
- How to Claim Tax Relief at Year End via P87 Form
- Evidence Required to Claim PAYE (P87) Employment Expenses
- Self Assessment Tax Returns
How Exceed Contracting Supports You
Managing expenses can be time-consuming, but the friendly team at Exceed Contracting are here to help:
- Guidance on Allowable Expenses: we’ll help you understand which expenses can – and cannot – be claimed
- Mileage Tracking Tools: we provide easy online systems to log and submit your business mileage
- Reimbursement Claims: we’ll help you receive HMRC-approved expenses with minimal hassle
- End-of-Year Support: get in touch if you need clarity on whether you need a P87 or self-assessment to maximise your tax efficiency
Expense Claims Summary
Exceed Contracting, will ensure your expense claims are handled professionally, leaving you free to focus on your work.
If you have questions or need assistance with your expenses, please reach out to our expert team – call 0800 612 8787 or email [email protected]
