Expenses

HMRC Dispensation

Have you contacted an umbrella company or spoken to your friends and colleagues about umbrella companies? If so you will have almost certainly heard the term ‘dispensation’. So, what exactly does it mean?

Almost all umbrella companies have a dispensation because they save time and therefore money. If an umbrella company does not apply to HMRC for a dispensation, they have to record every single expense that each and every contractor claims on form P11D. However, according to some umbrella companies, a dispensation is an “approved expenses policy” and a great way for contractors to increase their take home pay without even having to pay out for any ‘expenses’ in the first place. This is most definitely not the case. A dispensation does not mean you can make a claim every day even though you have not spent anything. You can only claim for money which you have spent in accordance with HMRC tax legislation and guidance. 

What are business expenses?

At Sombrilla, we believe that by claiming all appropriate allowances and exemptions, we can minimise your tax bill on your behalf. However, this is not a way of avoiding tax and we ensure we do so within the ambit of the law.

There are two kinds of business expenses - billable and non-billable:

What are billable expenses?

Billable expenses (sometimes known as reimbursable expenses) are those expenses incurred on behalf of the client where they have agreed to reimburse us.

What are non-billable expenses?

Non-billable expenses are those incurred while you are performing the duties of your assignment – for example travel or accommodation - which are not reimbursed by the client.. This kind of expense can only be claimed in accordance with HMRC tax legislation and guidance.

It is important to remember that claiming for expenses that you have not incurred would be viewed by the Inland Revenue as tax evasion.


Please email info@sombrilla.co.uk or call one of our advisers on 020 8951 0330 if you require any further information regarding expenses.

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