Expenses - Umbrella companies

mc25 Registered Posts: 232 Dedicated contributor 🦉
Happy new year to you all. Just a quick question. When umbrella companies pays their sub's (employee) travel and subsistence payments I have always thought this was allowable expenses. I have just started working with a client who was in partnership + working for umbrella company an due to submit their tax return, I only happended to ask the question if the client received any benefit and they have actually sent me through a P11d for the Travelling and Subsistence payments made, does this mean this is a benefit hence add ontop of employment income received or since it was cost for the employee working for the umbrella company it can be deducted while submitting the self assessment. Sorry if this sounds like a silly question, only i have never come across this before. Any replies welcome. Thanks.


  • payrollpro
    payrollpro Registered Posts: 427 Dedicated contributor 🦉
    I dread it when I read another post about the activities of umbrella companies and I am praying the proposed investigation of them by HMRC takes place this year as promised. I would have several problems with this, firstly, as we all know, anything on a P11D is additional taxable income irrespective of the actions taken by the payer in the process.

    Secondly, unless your client has all the original documentation regarding the travelling and subsistence then you cannot put through a claim. I am willing to bet that the UC kept all the original docs because they will be claiming the cost against tax and probably claiming back the input tax as well. You can't both have originals so someone has to lose out.

    Finally, you can't work FOR an umbrella company, you can only process your income THROUGH it. Your client will not have an employment contract with the UC and they act in much the same way as an agency. The worker carries out work for the end user but bills the UC for the labour charges. The UC then bills the end user and acts similarly to an employer but is not, if that makes sense.

    My understanding is that U/C's allow sole traders to enter into contracts with end users without carrying all the usual badges of trade, with the U/C carrying out their billing for them and taking a fee for the privilege. Some aspects of PAYE and employment rights are taken on by the U/C but they do not become the employer.

  • mc25
    mc25 Registered Posts: 232 Dedicated contributor 🦉

    Payrollpro thanks for your reply. I did suspect that was the case but when I was working on this one is was very late.

    A few year ago i had a situation where a friend was working for umbrella company, but the umbrella company never issued the p11d to the employee so 2 years down the line inland revenue gets in touch with employee and insist the employee did not pay enough tax while working for the umbrella company then i realised it was on traveling expenses claimed. I had to write to HMRC at that point informating them we had not been isued with P11d and also the travelling was all work related and they amended their record. But this time around the client is going to lose out + when they work for these umbrella company most of them they dont realise they are on tax code BR.

Privacy Policy