When you’re employed and paid by a UK Umbrella company like Exceed, 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 (as stipulated by HMRC), but if there’s anything you’re still unsure about, please see our Expenses Policy, or Contact Us.
Three types of expense claims are available to UK Umbrella company employees:
1. Reimbursable Expenses
If your recruitment agency or end client is paying you back for expenses you have incurred on assignment, 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.
HMRC-Approved Reimbursable Expenses:
- Business Mileage – see above
- Accommodation – if you’re required to work away from your normal assignment workplace
- Travel – such as bus/taxi fares, train tickets, flights/ferries, congestion/toll charges and parking
- Training – if you need to undertake specific training to do the job
- Other Assignment-Related Expenses – such as meals, business calls, specialised uniform, protective clothing, health checks, professional subscriptions and tools
To receive the full reimbursed amount without tax/NI deductions, under HMRC’s rules you must log each expense claim and submit a valid receipt/evidence directly to your employer – ie Exceed.
We appreciate this is inconvenient when you’ve already sent receipts to your agency/end client for approval, but our online portal – My Digital– makes submitting expenses and mileage as straight forward as possible.
Our payroll team will help ensure that all your non-taxable expense submissions meet HMRC requirements to avoid future challenges.
For details, please refer to our Expenses Policy and follow our Step-By-Step Guide to Submitting Reimbursable Expense Claims.
2. Business Mileage
If your agency reimburses business mileage, approved mileage will be paid to you free of tax/NI, once funding is received. If your agency does NOT reimburse mileage, depending on your employment contract, HMRC permits business mileage (only) to be offset against your taxable income, which will reduce deductions for a particular pay period.
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
- Cars | Vans: 45p per mile for the first 10,000 miles | 25p per mile thereafter
- Motorcycles: 24p per mile
- Bicycles: 20p per mile
Exceed 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 date, origin postcode, destination postcode and purpose, plus evidence if it’s for 100 miles or more in one day, and submit your mileage claims to Exceed on a weekly basis.
Useful HMRC Articles
- Mileage and Fuel Rates and Allowances
- When Travel Qualifies for Tax Relief
- Ordinary Commuting and Private Travel
3. End-of-Year Claims – Direct with HMRC
If you’ve incurred additional work-related 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 for certain allowable expenses.
What you can claim for will depend on whether you were under Supervision, Direction or Control (SDC) for each particular assignment, and if the workplace is classed as temporary or not.
Allowable Expense Claims for Tax Relief:
- Mileage costs above HMRC’s approved rates
- Accommodation and other travel costs
- Professional fees or subscriptions not reimbursed by your employer
You can submit the above expenses direct to HMRC via two different methods:
1/ P87 Form
If your allowable expenses are £2,500 or less for the tax year, and you’re NOT 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 ARE already filing a self-assessment tax return, you should include your expenses in the relevant sections of your Self-Assessment Tax 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 Supports You
Managing expenses can be time-consuming, so our friendly team at Exceed 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 an online system to easily log and submit your business mileage
- Reimbursement Claims: we’ll help you receive HMRC-approved expenses with minimal hassle
It’s a serious offence to make a false claim to HMRC, so Exceed audits all expense claims very carefully to make sure they’re compliant. We have a duty to report any fraudulent claims to HMRC and the Police.
Summary
Exceed 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]
