EXPENSES POLICY
1. Overview
Our expenses policy, processes (including audit) have been designed and implemented by Ernst & Young (EY).
The following policy will only apply where ADVANCE have received written clarification from the End Client, prior to the start of the role, which confirms that, where an umbrella employee is claiming genuine business expenses, that he/she is not subject to Supervision, Direction or Control (“SDC”) or the right thereof, and that the employee/role (or any other employee performing the same role) has not already been assessed as being inside of IR35 and/or the End Client is not aware of any such assessment.
Please note, from 4th January 2022 we no longer offer fixed expenses when onboarding new assignments, assignment changes or to umbrella employees returning to ADVANCE. This includes:
i.Subsistence (food and drink)
ii. Non-mileage travel e.g., public transport, air travel, taxis
iii. Accommodation / rent
The basic rule underpinning expense claims is that “an employee may deduct expenses incurred wholly, exclusively and necessarily in the performance of their duties.”
This document covers non-chargeable expenses. These are the out-of-pocket costs that you have incurred as a direct result of an assignment or assignments you have undertaken as an ADVANCE employee.
Expenses can only be claimed for periods covered by assignments, and where your current assignment is not expected to be your only or last assignment with ADVANCE. Expenses cannot be claimed for future projects where expenditure has not been incurred.
Where expenses are incurred for travel to one or multiple temporary workplaces during your assignment, these may only be claimed where the end client is consistent across the temporary workplaces. You must inform us immediately if this is not the case.
Please note that claiming for expenses you have not incurred would be viewed by HMRC as tax evasion and will not be supported by ADVANCE. In the event that ADVANCE find you to be falsifying expenses claims you will face disciplinary action.
All expense claims are reviewable. ADVANCE will consider if the expense claimed is:
(a) within the expenses policy; and (b) an allowable expense.
It is extremely important that you obtain and keep receipts for everything that you claim, because if HMRC investigates your tax affairs they will ask for evidence that the costs you have claimed have been genuinely incurred.
For assignments that were onboarded prior to 4th January 2022, where subsistence has been fixed at the beginning of the assignment and is being claimed, ADVANCE do not request supporting receipts for every claim made. ADVANCE do however conduct random weekly audits on subsistence claims. Each week ADVANCE select approx. 10% of all workers that are due to be paid subsistence expenses that week and request that they provide valid receipts to support their claims; these receipts must show that food has been purchased on the day of travel, after the qualifying journey has commenced. If you are selected as part of this audit and are unable to provide supporting valid receipts your claims will not be reimbursed.
Where a VAT receipt or a clear scanned copy is not provided for expenses that require this supporting evidence, the claim cannot be processed. We will automatically disallow any claims that would not be permitted by HMRC.
2. What expenses can I claim?
Legislation introduced on 6th April 2016 means that:
- Only those umbrella employees who are free from ‘supervision, direction or control’ (SDC) (or the right thereof) as to the manner in which they perform their duties are eligible for home-to-site travel and subsistence expenses; AND
- If you are eligible, some expenses will need to be fixed at the start of your assignment.
Subject to the above AND the information set out in section 1 (“Overview”), you are permitted to claim expenses providing your workplace meets HMRC’s definition of a temporary site (see Appendix 1). For this to happen, one of the following two criteria must be met:
- The engagement should not be expected to last for more than 24months and must not actually exceed that time; or
- The duties of the employment must not be performed to a “significant extent” at the workplace (normally not more than 40%).
If it becomes clear during an assignment that it will last longer than 24 months, then travel and subsistence expenses (if you are eligible) cease to be allowable from that date.
The three categories of legitimate business expenses that ADVANCE employees can claim are as follows:
a) Fixed expenses (for assignments onboarded prior to 4th January 2022)
i. Subsistence (food and drink)
ii. Non-mileage travel e.g., public transport, air travel, taxis
iii. Accommodation / rent
These expenses must be agreed upfront and fixed for your assignment. In order to be reimbursed you must incur an expense AND claim it.
As of 6th April 2016, legislation dictates that the value of any unclaimed / non- incurred fixed expenses must remain with ADVANCE.
This is why it’s imperative that you both incur and claim any fixed expenses. See section 3.
b) Variable mileage expenses
Reimbursable mileage expenses can vary according to what has actually been incurred during the course of your assignment(s). For mileage rates, see section4.
c) Non-reimbursable expenses
As of 6th April 2016, HMRC rules mean some expenses cannot be reimbursed directly.
If eligible, you can claim tax relief on these expenses at the end of the tax year through an annual expense return. See section6.
This table gives an overview of your eligibility for the different categories:
*See Appendix 1 for more information.
3. Fixed expenses (for assignments onboarded prior to 4th January 2022)
If ADVANCE fixes your expenses at the start of your assignment but then you fail to claim or fail to incur a cost, you will not be reimbursed for the element of the fixed expense that you have not claimed.
Therefore, we will only seek to fix your expenses if you are:
1. 100% sure that you will incur and claim the expense;
2. 100% sure what the amount will be (regarding travel & accommodation); AND
3. 100% sure that the expense will be incurred regularly on a recurring basis.
If we do not seek to specify a fixed amount of expenses for your assignment, you may still be able to claim tax relief on allowable expenses at the end of the tax year through an annual expense return. See section 6.
A) Subsistence
ADVANCE uses HMRC benchmark ‘scale rates’ to determine the appropriate level of subsistence (food and drink) reimbursement. The rates for daily meal allowances are as follows:
- Minimum 5 hours away from home / temporary work accommodation = £5 meal allowance
- Minimum 10 hours away from home / temporary work accommodation = £10 meal allowance
- Minimum 15 hours away from home / temporary work accommodation = £25 meal allowance
These amounts are only claimable when a cost has been incurred on food after the qualifying journey has started. Food and meals prepared before the start of the qualifying journey do not support a claim for a meal allowance for that day.
The minimum times set out above relate to the amount of time you spend away from home including travel, i.e., the length of time you are out of the house – not just the time spent at the site.
Here are two examples to show how this works:
- An employee who works an 8-hour day with one-hour total travel time (e.g., 30 mins to work site and 30 mins home) would be eligible for a fixed £5 daily food allowance. This is because they are away from home for 9 hours.
- An employee who works an 8-hour day with two-hour total travel time
(e.g., 1 hour to work site and 1 hour home) would be eligible for a fixed £10 daily food allowance. This is because they are away from home for 10 hours.
Please note that separate rates will remain for particular occupations (such as driving) where there is a working rule agreement in place. The HMRC benchmark scale rates outlined above will not replace them.
For subsistence claims ADVANCE do not request supporting receipts for every claim made. ADVANCE do however conduct random weekly audits on 10% of subsistence claims and you may be asked to provide supporting valid receipts before your claims can be reimbursed. Supporting receipts must show that food has been purchased on the day of travel, after the qualifying journey has commenced.
B) Non-mileage travel
Non-mileage travel (taxi, rail, bus, underground, parking, air travel etc) is a legitimate business expense and, under legislation introduced on 6th April 2016, must be fixed at the start of your assignment if you are to be reimbursed for the full amount.
ADVANCE requires supporting receipts for all non-mileage travel claims
C) Accommodation
Any accommodation costs – typically hotels or bed & breakfast establishments – must also be fixed at the start of your assignment if you to be reimbursed for the full amount.
Accommodation expenses are only allowable where there is corresponding evidence of related travel expenses. There are no allowable expenses available for staying overnight with friends and family.
When staying in accommodation which is VAT registered, VAT receipts must be provided for all accommodation expenses. See section 5.
You are also required to provide evidence that you have ongoing costs at your home location.
4. Mileage
Here, the reimbursable expenses amount can vary according to what has actually been incurred during the course of your assignment.
In line with current HMRC rates and thresholds, the following mileage rates can be claimed when using your own vehicle or a hired vehicle:
VAT receipts must be provided for all mileage expenses. See section 5.
A record of the journey must be maintained which includes the date of the journey, the vehicle registration details, the mileage, the places visited and the reason for the visit.
You must also hold appropriate insurance to drive the vehicle in respect of business use.
5. Claiming your expenses
All expense claims MUST be received by 12pm midday every Monday, either online or through the ADVANCE expenses claim form.
Claims must be submitted with seven days of being incurred. A declaration must also be made to confirm that the expenses you are claiming for have been incurred wholly, exclusively, and necessarily in the performance of your duties.
As stated in section one, it is extremely important that you obtain and keep receipts for everything that you claim, because if HMRC investigates your tax affairs it will ask for evidence that the costs you have claimed have been genuinely incurred.
When scanned copies are sent you must retain original receipts and you may be asked to send them to ADVANCE for audit purposes. If copies of receipts are not visible you will be asked to send them again or provide originals.
We reserve the right to request to see your receipts for internal review and auditing purposes. The below table outlines our requirements regarding receipts.
Where the above table states No, you must still retain a receipt to prove that the expense has been incurred as an audit requirement of ADVANCE and HMRC.
See Appendix 1 for more information on home-to-site versus site-to-site travel.
*Please note, if the merchant is VAT registered, we require a supporting VAT receipt for these claims.
6. Annual expense return or self-assessment
Upon request ADVANCE can support you with the completion of an annual expense return or a self-assessment.
a) Annual expense return
An annual expense return (also known as a form P87) will enable you to obtain tax relief on allowable expenses incurred wholly, exclusively, and necessarily in the performance of your duties during the course of your employment with ADVANCE, and for which you have not previously been reimbursed.
An example would be those expenses that were not fixed at the start of your assignment.
The annual expense return will only relate to your employment with ADVANCE. We are not able to account for other periods of employment you may have had during the tax year.
Please note that an annual expense return is only applicable to individuals whose expenses are less than £2,500 for the year.
b) Self-assessment
If you have had multiple employments during the year and/or if your expenses for the year are £2,500 or more, ADVANCE is able to complete a self-assessment tax return on your behalf at a very competitive price.
Examples of expenses on which tax relief is available through an annual expense return or self-assessment include:
- Accommodation and public transport / non-mileage expenses that weren’t fixed at the start of an assignment (if you are eligible for these expenses)
- Small tools and equipment
- Protective clothing and equipment
- Telephone calls
- Postage and stationery
- Professional fees/subscriptions
- Eye tests
Appendix 1: Expenses for employees who are subject to SDC
(to be claimed on annual expense return)
a) Mileage allowances
Where we have confirmed to you that you are subject to SDC, you may only claim mileage expenses for those journeys which qualify for relief. Journeys from home to and from the client site cannot be claimed as that site will be regarded as your permanent workplace.
If however the client requires you to attend a workplace other than your normal workplace for that client, on an exceptional basis, the journey to and from that temporary workplace may be claimed.
b) “Depot” based workers
If you start your working day by attending a client depot or base and from there receive instructions on your work and journeys for the day, journeys to/from the depot may be claimed, but not your journey to/from home to the depot or base.
c) “Multi-site” workers
If you travel to multiple client sites during a day, but are not required to attend a depot or base, journeys between client sites may be claimed, but not the first journey of the day from home to the first client site or the last journey home from the final client site.
d) “Site-based” workers
Different rules apply to site-based workers. If the client requires you to work at various sites during an assignment, but there is no certainty at the outset of the assignment which sites you will attend, you may be regarded as a site-based worker such that your journeys to/from home to client sites can be claimed. If these rules apply to you, we will let you know.
e) Applicable mileage rates
An employee may claim a cost per mile for allowable business journeys (as set out in section 4) in his or her own vehicle. There is a distinction between the first 10,000 miles in any tax year and any subsequent miles. The cost of parking, toll and congestion charges are also allowable, but fines (e.g., parking or speeding) cannot be claimed.