As an IT Contractor, you will spend money on a variety of things in the course of your work. During the course of each tax year, you should retain receipts for all expenses where possible.
Claiming expenses will help to reduce your overall tax liability and therefore maximise your take home pay.
You should always check with your accountant before submitting an expenses claim, as this list represents only a high-level overview of allowable expenses.
Standard Allowable Expenses
- Accountancy Fees
- Business Travel (rail, air, taxis, etc.)
- Stationary and Postage
- Pension Scheme (if contributions are paid by the company)
- Telephone Calls for business purposes – unless you have a dedicated business line or mobile, you should highlight all business-related calls on your expense forms.
- Salary paid to the IT Contractor (and spouse if applicable) for work done
- Magazine and other subscriptions
- Relevant training courses
- Professional Indemnity and other IT contractor insurance
- Car Travel under the Inland Revenue agreed ‘Fixed Profit Car Scheme’ – currently 40p/mile (first 10,000 miles p.a), and 25p thereafter. [2005/6]
- Car hire and parking (when on business)
- Computer equipment (tax relief is spread over several years)
- Subsistence and accommodation when working away
- Eye Test – you can claim back the cost if you use a computer screen!
If you’re caught by IR35
If your contract work falls under the IR35 rules, alongside your salary you can only claim expenses incurred wholly, exclusively and necessarily in the performance of your contract work (e.g. travel, insurance and contract-related training) together with a 5% “administration allowance”.
This expenses allowance is a flat rate deduction of 5% of the gross fees receivable for any relevant contracts and you do not need to provide receipts.