For contractors, the ability to claim back the cost of business-related expenses is one of the top benefits of working within the contracting community. Expense claims must be attributed to costs that are ‘wholly, exclusively and necessarily in the performance of your duties’.
In recent years, the rules associated with umbrella contractor expense claims have changed drastically, significantly reducing (if not removing entirely) the number of items you are entitled to claim.
In order to claim these expenses, contractors must first pass the SDC test to identify what expenses you are able to claim under HMRC rules (if any).
Supervision, direction and control (SDC)
The concept of supervision, direction and control was introduced in April 2016 as a way to identify contractors that should not be claiming travel and subsistence expenses. Put simply those who are subject to SDC aren’t eligible to claim whereas those who pass the SDC test are eligible for travel and subsistence related expenses.
If a contractor’s work is being supervised by someone within the hiring business, including how the work is being carried out and the standard to which it is being carried out, then said contractor is subject to supervision.
A contractor that is being guided or instructed on how to carry out their work by someone from within the hiring business, then they will be subject to direction.
If anyone within a hiring business has the right to dictate to a contractor how their work should be carried out, rather than allowing said contractor to determine their own way of working, then they are subject to control.
What can you claim?
If a contractor has passed the SDC tests (above), then they will be eligible to claim back certain expenses.
Should your contract require you to work away from home, you can claim back expenses for hotels, B&Bs or lodgings.
Travel expenses between your home and your workplace, or your lodgings and your workplace may be submitted.
Any food or drink consumed during the working day (excluding alcoholic beverages) may be claimed back. Find out more about claiming business-related expenses here.
Here at Sterling Group, we provide our contractors with an easy-to-use portal, within which they can submit their expenses online. Want to learn more? Contact the Sterling team today with any questions you may have.