As an umbrella employee, it’s a common misconception that you’re no longer able to claim travel expenses. Despite the SDC changes to expenses, you may still be able to claim costs back when you’re working under an umbrella. Our guide outlines what costs you could claim back for travel and subsistence and how the changes to SDC could impact what you are able to claim.
How could Supervision, Direction and Control (SDC) impact you?
Prior to April 2016, workers employed under an umbrella were able to claim travel, subsistence and other business expenses when working at a temporary workplace. But the rules have since changed, restricting these freedoms. Since 2016, the travel and subsistence expenses allowed are restricted if the worker:
- personally provides services to another person;
- is employed through an employment intermediary (such as an umbrella company); and
- is under (the right of) the supervision, direction or control of any person, in the manner in which they undertake their work.
Here are some of the most asked questions about umbrella expenses
What is travel and subsistence?
Travel and subsistence outlines the cost of business spends on meals, accommodation, commuting and other which are incurred whilst travelling to a temporary place of work.
What is a temporary workplace?
A temporary workplace is one which you work in irregularly, for less than 24 months. In order for a workplace to be temporary, it must be:
- Necessary for the completion of the task
- Carried out for a specific purpose
- Involves working for a limited duration of time
The 24-month rule states that if you are working for the same client continuously and are travelling to the same site, travel and subsistence expenses can no longer be reimbursed without tax and National Insurance contributions.
Looking for an umbrella company?
We understand that the right support by your side is crucial, whether you’re working through your own limited company or under an umbrella. That’s why our sister company, Parasol, is here to help.
Using their years of experience in supporting contractors, they’re well placed to get you up and running and give you the tools to help you throughout your career.
What costs can you claim for mileage?
HMRC class every assignment as under SDC, unless you can prove otherwise. Therefore, the cost of travelling to a temporary workplace can not be expensed. If you are working for multiple clients, and are able to prove each assignment is not subject to SDC, you are able to claim the cost of mileage.
To determine SDC status, most agencies will require you to complete a questionnaire, to show that you are eligible. You will also need:
- Verification of your vehicle type and engine size
- Fuel receipts
When claiming mileage, HMRC requires that you keep the following information:
- The date of your journey
- The reason for your journey
- Where you’ve travelled from and to
- The total mileage
The current rates for travel expenses are as follows:
|Mode of transport||First 10k|
|Cars and vans||45p||25p|
Can I claim the cost of travel on public transport?
You cannot claim the cost of public transport expenses for the cost of travel to an assignment.
Can I claim the cost of subsistence?
As an umbrella employee, you cannot claim subsistence costs, regardless of whether your employment contract is subject to SDC.
Need expert help?
Why not speak to our sister company, Parasol? As the leading provider of umbrella solutions, they’ll be able to walk you through any questions you may have, hassle-free.
Parasol looks after all your Income Tax and National Insurance obligations, plus provide you with all the employment rights and benefits given to permanent workers. Call them today on 0800 4701 549 or submit the form below.
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