The answer normally lies in some obscure text or line in your contract, such that you end up glossing over. Then when the day comes and you’ve been extremely good and sensible in keeping all your receipts…your agency and client state you can’t “claim them”.

Great! So now your commute to work has become a pain in your pocket, and that lunchtime sandwich has become the bitter taste of cash you won’t get back.

When it all started in April 2016…
It’s a date that will be remembered by many contractors as the month when they lost the ability to offset travel and subsistence expenses (through an umbrella company). Many lost the claim if they “failed” the SDC rule as implemented by HMRC (otherwise known as supervision, direction or control). The drop in pay impacted the majority of contractors (with some losing up to 20% off their net rate).

After six months, the question around expenses is still at the tip of all contractor’s tongues because umbrella companies and agencies don’t actively seek to clarify the rules and regulations around it. It’s the blind leading the blind in most cases. So we decided we’ll give you some handy tips together to help make sure you’re not out of pocket.

Be specific and take the initiative
Ask your agency what your status is specifically when it comes to the SDC rule. If they can’t clarify, ask them to get the answer from the client, quickly.

Check if there is any ‘leeway’
If your agency confirms you can’t claim expenses, it doesn’t hurt to see if you can try negotiate a better rate or try to see if (at a bare minimum) your travel expenses could be reimbursed. Don’t be afraid to push your agency in getting better terms for yourself.

Shop around
Don’t accept what’s offered to you straightaway. We know it’s easy to go with the umbrella that your agency has recommended (no one likes to spend time searching!) but you’re likely to find that the umbrella you’ve gone with is either providing a poor service when things go wrong or you end up receiving a reduced rate, due to the fact that the agency is taking a nice fat referral fee for you using their payroll provider.

Limited isn’t the answer for expenses
At this point, many contractors start to look at the route of creating their own limited company (take a look at our post on why Limited isn’t such a great idea either) but there are pitfalls of going down this route (namely being caught out by IR35 and getting a hefty fine/tax invoice). With HMRC putting in the ‘going tax digital’ initiative in place, even more limited company contractors and freelancers are going to be drowned by what they need to do, and that’s before the 2017 ban on public sector workers “going limited”.

There is one way…
From all that you’re probably thinking, it sounds a major pain to even start thinking about expenses, indeed we’re sure you’re probably experiencing a headache already. Truth of the matter is that it is, unfortunately. We know HMRC doesn’t like to make things simple for you and getting help from your agency is sometimes like drawing blood from stone.

This is where introduce ourselves. Appytech takes the legwork out of the whole expenses palaver by basically doing all the above (talk about giving you more! *hint hint*). We’ll

  • Review your contract to see if the SDC rule applies to you (we’ll work with your agency to get you more)
  • Negotiate on your behalf to get you better contract terms and conditions (we’ll try get some free fruit or a breakfast bap in there for you somewhere)
  • Join Appytech’s ever-growing merry band of contractors. It’s a bit like a worker cooperative (but a tiny bit more sophisticated), which means we process your expenses at a “group” or “collective” level and the benefits get distributed amongst you all. See it as a bonus that doesn’t cost you anything…and before you ask, it is 100% legitimate and compliant with the powers that be, and HMRC.

Posted in Contracting, Finance, Knowledge, Umbrella On August 31, 2016