Danbro Expenses Policy

Transcription

1 Umbrella Services Danbro Expenses Policy A summary of expenses you can claim while working through Danbro. Applicable to all employees who joined Danbro on or after 7th July Accounting Solutions

2 Using This Guide Tax law can be a complicated subject but we aim to keep it as simple as possible. This policy is designed to help you understand what you can and can t claim for as a Danbro employee. Ultimately, our aim is to make you as tax efficient as possible. The first part of this guide explains the conditions set by HMRC that define when you can and can t claim expenses against tax. It is very important you understand all of these conditions; failure to meet these conditions will result in you being separately assessed and liable for the tax on taxable benefits you have claimed. Please make sure you read them carefully. The second part of this guide provides a summary of the different types of tax-deductible expenses and the rules around the circumstances in which they can be claimed. Section A: Summary of Expenses Conditions 1. Temporary Workplace 2. Significant Location Change 3. The 24 Month Rule 4. The 40% rule Section B: Summary of Expenses that can be Claimed 5. Scale Rate Subsistence 6. Business Mileage 7. Receipted Expenses 8. Other Expenses 9. Expenses for International Contractors

3 Section A: Summary of Expense Conditions 1. Temporary Workplace As a Danbro employee, travel (including business mileage) and subsistence (meals you have paid for) can be classed as tax-deductible expenses. To qualify for this, your place of work must be regarded as a temporary workplace and you must have an anticipation of further assignments through Danbro. What is a temporary workplace? A temporary workplace is defined by the area you are working in rather than the company you are working for. The moment you know that your workplace is no longer considered temporary is the moment you need to stop claiming expenses for travel and subsistence. Your assignment qualifies as a temporary workplace if: a) You intend to complete future assignments through Danbro. b) You know that your assignment is not your last. c) You know your current assignment will not last more than 24 months. 2. Significant Location Change For any new contracts you undertake, there will need to be a significant difference in travel distance and route from your previous contract in order for the workplace to be classed as temporary. Without a significant change in journey, travel and subsistence expenses will not be allowed. More specifically, your new contract must comply with the following in order for you to claim for travel and subsistence: Be a minimum of 10 miles away from your previous contract. The route to and from the workplace must be at least 80% different from your previous contract.

4 3. The 24 Month Rule We ve already explained the importance of defining your assignment as a temporary workplace by the intention to carry out multiple assignments. The 24 month rule will also need to be considered when establishing an assignment as temporary, as this rule governs each and every assignment. Definition: Any assignment which is to last longer than 24 months will be classed as permanent, therefore travel and subsistence will no longer be regarded as tax deductible. This rule comes into effect the moment you know that your work period will be longer than 24 months. If you are aware that the assignment is to last over 24 months at any point in the duration of your employment, and we were not made aware of this, you could be liable for re-assessment by HMRC. Examples: In these and similar circumstances you will not be able to claim for travel and subsistence because the contract will be considered permanent: If, from the start, you are aware the assignment will be longer than 24 months. If, at any point during your assignment, you know the contract will last longer than 24 months, you will not be able to claim for travel and subsistence from this point forward

5 4. The 40% Rule The 40% Rule is linked directly to the 24 Month Rule. This applies to employees who are mobile and return to a place of work on a regular basis. The 40% Rule only applies when you have a 24 month period to assess. Definition: If over a period of 24 months you have spent over 40% of your time at a particular workplace, regardless of any gaps in employment, and you return to that workplace, then your workplace will be considered as permanent and you will not be able to claim travel and subsistence. The 40% rule only applies when all of the below statements are true: You have a 24 month period with Danbro to assess (this includes future contracts that you are aware of i.e. if you know that you are on an 18 month contract and have already worked for 6 months with Danbro you will be classed as having a 24 month period to assess) You undertake a contract at the same place of work as a previous contract Undertaking this contract would take your total time spent at that place of work over 40% of the 24 month period. Examples of when you would be caught by the 40% Rule and therefore be unable to claim travel and subsistence: If you complete a 6 month assignment at a single workplace, followed by a 6 month assignment at a different workplace, and return to the first place of work for a further 12 months, your second contract will take you over a 24 month period at the same place of work. Within the 24 month period, 18 months will have been worked at the one workplace. Therefore, as you have spent more than 40% of your time there, this contract is no longer considered temporary. At the point you accept the 12 month contract travel and subsistence expenses can no longer be claimed If, at the start of your contract, you anticipate to spend more than 40% of your time there over a period of 24 months. If, at any point during your assignment, you are aware that the 40% rule will apply. The moment you know the 40% rule will apply to a particular place of work, the workplace will be considered permanent and you will no longer be able to claim travel and subsistence expenses.

6 Section B: Summary of Expenses that can be Claimed 5. Scale Rate Subsistence Whilst working at a temporary workplace, there are certain expenses listed below which you can claim without submitting a receipt to us. While expenses can be claimed without sending a receipt, you are required to keep all receipts for your records. These receipts will be needed for audit purposes to prove that a cost was incurred and a failure to provide these when required will prevent future claims from being accepted. The cost for subsistence must have been incurred in performance of your duties and can only be claimed for meals whilst working at a temporary workplace during the working day. Once you decide to take scale rate subsistence claims, you will not be able to claim receipted meals. The allowances are set as Benchmark scale rates. These are limited to three meal rates per day or per 24 hour period. This allowance reflects an average over the course of your employment. It is expected that on occasions you will have meals that cost under and over the scale rates provided. A meal is defined as a combination of food and drink and would take a normal dictionary meaning. A working day is defined as working hours plus travel time. If you expect that your meals will always be over the below rates, you will need to consider making all your meal claims via the receipted option. Everyday allowances can be given for: 5 Hour Rate = 5 per day. The rate may be paid where the employee has been undertaking qualifying travel for a period of at least 5 hours and has incurred the cost of a meal. 10 Hour Rate = 10 per day. The rate may be paid where the employee has been undertaking qualifying travel for a period of at least 10 hours and has incurred the cost of a meal or meals. When employees are required to start early or finish late on a regular basis, the over 5 hour or 10 hour rate, whichever is applicable, can be paid providing that all the other qualifying rules are satisfied. Other allowances can be given for: The breakfast and late evening meal rates are for use in exceptional, irregular circumstances only and are not intended for employees with regular early or late work patterns. Breakfast Rate = 5 per day. The rate may be paid where an employee leaves home earlier than usual and before 6.00am and incurs a cost on breakfast taken away from their home after the qualifying journey has started. Late Evening Meal Rate = 15 per day. The rate may be paid where the employee has to work later than usual, finishes work after 8.00 pm having worked his normal day and has to buy a meal before the qualifying journey ends, which he would usually have at home. Example of Irregular : Over 5 breakfast or evening meal claims a month will be deemed as a regular meal and therefore you will not be able to claim this expense.

7 6. Business Mileage Mileage can be claimed for all business related travel. This includes from home to your temporary workplace, and vice versa. What are the Rules? You must provide the correct make, model and registration number for your vehicle. It is also important that you send in all of your fuel VAT receipts, Danbro will not approve business mileage if receipts are not received to qualify your mileage claims. Your car must also be insured for business use, be taxed and have a valid MOT certificate (if applicable). These expenses are subject to the 24 Month and 40% Rules. Cars and Vans: 45p per mile for the first 10,000 miles. 25p per mile over 10,000 miles. Motor Cycles: 24p per mile for the first 10,000 miles. 24p per mile over 10,000 miles. Bicycles: 20p per mile for the first 10,000 miles. 20p per mile over 10,000 miles. Passenger Allowance: 5p per passenger per business mile is allowed for carrying fellow employees in a car or van on journeys which are also work journeys for them. Only payments specifically for carrying passengers count and there is no relief if you receive less than 5p or nothing at all. To qualify for this allowance we will require: 1. For you to name all the passengers within the car. 2. The passenger to be a Danbro employee. 3. For you to provide us with statements from each passenger to confirm they do travel in this vehicle. Please note that the passenger cannot claim business mileage on top of this.

8 7. Receipted Expenses You will need to provide a receipt for all of the following expenses. Danbro will not approve any of the below expenses before the receipt is received. Accommodation You can claim the cost of accommodation if the cost is supported by receipts up to the following amounts: 150 per night staying within the M per night outside the M per night outside the UK and Eire Providing you have not already claimed 3 meals for the day, e.g. over 10 hours at 10 and an irregular breakfast at up to 5, you can claim the actual cost of an evening meal up to 26 supported by a receipt. Incidentals For each night you stay away from home you can also claim incidental expenses up to a maximum of 5 a day in the UK and 10 a day when overseas. Incidental expenses comprise costs such as: laundry, personal telephone calls and newspapers. You don t need receipts but this isn t a round sum allowance so if your incidental expenses total 3.59, you can only claim Rail, Bus, Parking and Air Travel Rail, bus and air travel to your place of work can be claimed on provision of receipts. Parking costs (at the most economic rate) can also be claimed and receipts are required. Telephone You can claim back the cost of any business calls made on your private telecommunication system. This includes mobiles and internet access. Where a separate telecommunication system is used exclusively for business purposes, the full cost may be claimed (including rental/standing charges). Itemised bills are required to make this claim. Rented Accommodation If you rent accommodation when away from home then the costs such as gas, electricity and council tax, but excluding water rates, can be reclaimed. However, for this to apply you must maintain and continue payment for a main residence elsewhere in the UK that you return to when you are not working. A copy of the rental agreement and receipts for the rental payments must accompany the claim. If you don t return to your main residence when you are not working, you can only claim 5 out of 7 days of the rental costs each week, unless you spend 7 days a week working. Staying with Friends or Family If you decide to stay with family or friends, rather than a hotel, when away on business, a cost can be claimed (if incurred) for your evening meal. Please supply the receipt, along with acknowledgement that the claim was whilst staying with friends or family. Please note: when making accommodation, Rental or staying with Friends or Family claims, you must be maintaining payments to a main residence elsewhere within the UK. You will be expected to provide evidence to support your claims. If you only maintain payments to one residence within the UK, you cannot claim for accommodation. Subsistence If you are not claiming the scale rate for subsistence, you can claim the cost of meals incurred while on temporary assignment. The meals must be considered wholly, exclusively and necessary, therefore the values would need to be reasonable and must not exceed 30 for the day. Evening meals and breakfast won t be allowed if the cost is incurred on a regular basis.

9 8. Other Expenses Purchases made that are wholly exclusively and necessary to fulfil your professional role, can also be claimed. Below are some of the items you can claim. Eyesight Tests If your work involves continued use of visual display equipment, a claim of up to 15 towards eyesight tests can be made. Receipts from a qualified optician must be provided. Stationery and Books Any stationery or books used wholly, necessarily and exclusively in the performance of your duties can be claimed. Receipts must be provided. Professional Fees and Subscriptions In some circumstances and only when required to carry out your job, you may be eligible for tax relief on expenses such as; you need to be included on a professional register, buy a special license or be a registered member of a particular organisation. If you would like a list of allowable professional subscriptions please just ask. Computer Hardware and Software Where the purchase of computer hardware and software is essential for you to carry out your job you can claim expenses of up to 500 a year. We will require receipts for all payments made even if they exceed Expenses for International Contractors International contractors, who register with Danbro before entering the UK, are allowed to claim additional expenses. All other expenses in this policy are applicable to international workers, as long as the place of work is a temporary workplace and expenses are incurred wholly, necessarily and exclusively in the performance of your duties. The employee must be non UK domiciled (i.e. a person whose country of residence is not normally in the UK), and must not have a history of UK residence during the two tax years before the tax year of arrival. The section on the right highlights the additional expenses that can be made. Receipts will need to be provided for all claims. Travel Costs You are eligible to claim for travel to and from your home country, including your flights between your home country and the UK for the first five years. Travel expenses of your spouse/civil partner and children under 18 when accompanying or visiting you, for up to two trips a year, are also eligible for a five year period. Relocation Costs These costs relate to you and your family relocating to the UK to take up a temporary contract. The maximum amount you are allowed to claim for relocation is 8,000. Expenses and benefits that may qualify are as follows: Costs of disposing of your existing home Costs of acquiring a new home Costs of moving household furniture Travel and subsistence costs Costs of replacing domestic goods Bridging loans What Next? We hope this guide has helped clarify which expenses you can claim and the conditions that might affect your ability to claim these expenses as tax-deductible costs. If you have any questions regarding this policy or are unsure about any aspect please get in touch. We know it might sound complicated but it s important you understand this policy. We re here every step of the way to support you wherever and whenever we can - it is our job to make yours easier.

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