Contracting under an umbrella - expenses
Discussion
Did a stint abroad via a foreign agency who paid me as an umbrella, ie salary slip had overall gross amount, then employer tax deductions, then employee tax deductions and then net.
Under double taxation rules I need to work out if I have to pay any shortfall in tax not paid over there so can I deduct the same expenses I would be able to if I was a UK contractor under a UK umbrella?
Also should I be using an average currency rate over the period or breakdown month by month. (Used UK account whilst overthere so only transferred money later on).
Under double taxation rules I need to work out if I have to pay any shortfall in tax not paid over there so can I deduct the same expenses I would be able to if I was a UK contractor under a UK umbrella?
Also should I be using an average currency rate over the period or breakdown month by month. (Used UK account whilst overthere so only transferred money later on).
If you are seeking to claim "employee" type expenses against UK tax, the expense claim must comply with the UK rules on allowable expenses for employees. In other words, the expenses must have been incurred "wholly, exclusively and NECESSARILLY in the course of your employment".
That means, any expense incurred by you during your employment where you weren't OBLIGED by your employer to incurr it CANNOT be offset for UK tax purposes.
It is quite a stringent test.
That means, any expense incurred by you during your employment where you weren't OBLIGED by your employer to incurr it CANNOT be offset for UK tax purposes.
It is quite a stringent test.
Hi Eric,
Many Thanks- is there no way I can count the agency as a bonafide umbrella? just like a UK umbrella company
Because I was contracting, and deductions for employers side were paid by myself can I not count it the same as a UK contractor working via a UK umbrella who is able to legitimately deduct travel/milage etc, after all it was a temporary place of work and I would not have been travelling or living abroad if not contracting?
Many Thanks- is there no way I can count the agency as a bonafide umbrella? just like a UK umbrella company
Because I was contracting, and deductions for employers side were paid by myself can I not count it the same as a UK contractor working via a UK umbrella who is able to legitimately deduct travel/milage etc, after all it was a temporary place of work and I would not have been travelling or living abroad if not contracting?
amir_j said:
Hi Eric,
Many Thanks- is there no way I can count the agency as a bonafide umbrella? just like a UK umbrella company
Because I was contracting, and deductions for employers side were paid by myself can I not count it the same as a UK contractor working via a UK umbrella who is able to legitimately deduct travel/milage etc, after all it was a temporary place of work and I would not have been travelling or living abroad if not contracting?
Were you taxed as an employee i.e. under the PAYE system (or the foreign country's equivalent)?Many Thanks- is there no way I can count the agency as a bonafide umbrella? just like a UK umbrella company
Because I was contracting, and deductions for employers side were paid by myself can I not count it the same as a UK contractor working via a UK umbrella who is able to legitimately deduct travel/milage etc, after all it was a temporary place of work and I would not have been travelling or living abroad if not contracting?
Edited by Eric Mc on Tuesday 29th December 12:31
Many Thanks Eric,I need to pay up then.
Out of curiosity though how do UK umbrellas such as http://www.contractorumbrella.com get away with allowing expenses to contractors?
Out of curiosity though how do UK umbrellas such as http://www.contractorumbrella.com get away with allowing expenses to contractors?
Beacuse they seem to have a fairly lax atitude to the rules. I think "getting away with it" is an apt description of what many of them do.
If your contract was on a self-employed basis, then the rules for claiming expenses would be more generous - but getting self employed status for what are, in effect, agency staff, is not easy.
If your contract was on a self-employed basis, then the rules for claiming expenses would be more generous - but getting self employed status for what are, in effect, agency staff, is not easy.
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