13 Feb Navigating Contractor Expenses: What You Can and Can’t Claim
What expenses you can and can’t claim as a contractor can be a confusing area. Here we look at the issue in more detail and clarify exactly what you’re entitled to claim in the way of expenses to make sure you’re never out of pocket.
Every line of business incurs expenses – whether that’s purchasing protective clothing, running a mobile phone, or travelling to and from meetings. However, if you’re a contractor there are certain things that you can claim as a legitimate business expense and others that you can’t – the latter includes such things as claiming £4.50 for sausage and chips meal for 250 days straight or renting a caravan for an Easter break.
The starting point must be to establish whether you’re eligible to claim expenses. This comes down to the Supervision, Direction and Control (SDC) test which was introduced in 2016 to determine whether contractors could claim expenses for travel and subsistence. If you are subject to the following you are not eligible to claim:
- Supervision – is your work supervised (how it’s carried out and to what standard) by an end-client?
- Direction – are you ‘guided’ or do you receive specific instructions on how to carry out your work?
- Control – does your end-client control how you carry out your work?
If the answer to any of these questions is yes then you are not eligible to claim expenses.
If, however, you can answer no to these questions or you provide your services to an end-client that requires you to work from more than one location within the same assignment you are eligible to claim for certain expenses.
What can you claim for?
If you have established that you are not subject to SDC you may be able to claim for the following:
Travel – all modes of transport are covered including public transport, taxis, bicycles and private cars, but accurate records must be kept to justify the expenses claim which must be work-related – for example, you can claim for a travel card (and use it for private travel some of the time) as long as it is a cheaper option than an individual ticket
Equipment – if you use equipment such as a laptop that requires specialist software or you have to purchase a new computer for the purposes of your assignment you may be able to claim some of the costs back. This also applies to furniture which you might need (a supportive chair, a desk etc) as well as a printer/scanner, and other office supplies.
Phones and broadband – you are allowed to claim back expenses on business calls (you can ask for an itemised bill) and, if you have a mobile phone which you use solely for work you can claim back the cost of the monthly tariff as well as the cost of the phone itself. Broadband expenses may prove more difficult if you have an existing package
Pensions – if you take advantage of our salary sacrifice for pension contributions you may be able to claim back some of the costs of providing for your future
Clothing – if you have to wear specialist or protective equipment during the line of your duties you can claim for their purchase
Professional memberships – if your role requires you to be a member of a professional organisation you may be entitled to claim back the membership fees. All approved organisations are listed here.
What can’t you claim for?
Claims can only be submitted for expenses that fall outside of the terms of your employment, and do not relate to the everyday course of your job. Things that you can’t claim for include:
- Travel to and from work on a daily basis
- Energy bills for an entire dwelling (if you work from home)
- Office lighting
- Gifts for clients
- Qualifications or training that does not relate directly to your job
- Spurious or multiple claims for tablets/phones/games consoles
- Client entertainment
- Personal holidays disguised as business trips
How can i4 help?
As part of our commitment to provide our contractors with the highest possible standards of service, we make claiming expenses as simple as possible. The i4 app allows registered contractors to submit expenses electronically and lets you view the status of your claim.
We also offer all our contractors the ability to speak directly to a dedicated and experienced customer advisor who can help you understand any issues surrounding your expense claims and support you if and when you need it.