French umbrella company and claiming your expenses
One of the perks of being an umbrella employee is the ability to claim expenses.
Contracting is an avenue for a variety of employees with specialized skill sets that cater to an even more varied array of clients.
Not all jobs require employees to sit in front of computers or behind desks, some jobs ferry them away to different sites and locations — to field work, to lunch meetings, to on-site assignments. This entails expenditure on the part of the employee.
Luckily, umbrella companies aid their employees cut back on costs.
Along with billing and invoicing your clients for contracts fulfilled, umbrella companies also invoice your client agencies for whatever expenditures you may have had while you carry out your contract.
We at ABC Portage know our employees take their work seriously and we would like to make sure they are properly compensated for it.
We take care of our employees. So don’t worry if you have to cash out now, we will make sure that you would be reimbursed later.
What does it mean to claim expenses?
As a general rule of thumb, claiming expenses means “that an employee or office holder may deduct expenses incurred wholly, exclusively and necessarily in performing their duties”.
Be warned however than these expenses must be completely legitimate for you to avail of them or else you may face serious consequences.
By claiming your expenses you technically offset your tax rate because they are considered as tax benefits and are processed as such. This does not in anyway eliminate your taxes but helps you minimize your salary deductions by a considerable amount.
What kind of expenses can I claim?
There are two main types of allowable expense claims umbrella employees can make:
|CHARGEABLE EXPENSES||NON-CHARGEABLE EXPENSES|
|– work expenses you have declared beforehand, expenses clients are aware of and have signed off on
– need to fill out a claim form, countersigned by client agency
– additional invoice on top of contractual job invoice
– claim the full amount
|– expenses employees make as part of the job out of their own pockets
– if proven legitimate, are considered as tax benefits
– decrease tax liability
– you are not reimbursed the full amount but only a portion of what you’ve spent
Chargeable expenses are those expenditures that client agencies will out-right reimburse umbrella employees in full. This is because clients are informed of the added costs that accompany the job before they are made and have deemed them necessary for the employee to fulfill his contractual obligations.
The job of umbrella companies is to invoice these chargeable claims on top of the contract invoice. Once the employee makes salary, the money he/she has spent on the job has already been returned.
Non-chargeable expenses are those incidental expenses made while the contractor is carrying out his/her job without having claimed them beforehand. They are also necessary expenses, but have not been filed earlier because the need only arose when the current situation demanded it.
This is typically money out of the employee’s own pocket. To claim these expenses, they must be first and foremost legitimate and require some proof. Unfortunately, employees do not get to claim the entirety of the amount back. Instead they are deducted from income tax, offsetting your liability.
What allows me to claim expenses?
When you register under an umbrella company, you are technically a freelancer with employee status.
Freelancers typically work from home on contractual jobs that last for a short period of time, sometimes only days. Your work situation is deemed temporary, meaning it takes you away from home (an employee’s permanent address) to the client’s site for the duration of the contract.
Travel or secondary accommodations are necessary for the job to be fulfilled; therefore you can claim these expenses.
What do I need to claim my expenses?
Proof. It cannot be stressed enough that expenses must be legitimate in order for you to claim them. It is imperative employees save their receipts to legally claim expenses.
What do clients consider as allowable expenses that I can claim?
The question brings back to this: “an employee or office holder may deduct expenses incurred wholly, exclusively and necessarily in performing their duties”.
You can claim expenses for money you may spend on travel, getting to your temporary place of work and back home. Depending on your negotiations with your client agency, this can range from travel allowance to vehicle maintenance, parking and toll fees.
FOOD & LODGING
Some jobs require you to stay at a locale for a period of time. You may also claim expenses on secondary accommodation in hotels or inns for the duration of your contract. You can also claim expenses for the food you will consume during your stay.
Certain job descriptions require the employee to go under training before they carry out their contracts. Client agencies can also reimburse you for this because it is required for work.
PROFESSIONAL SUBSCRIPTIONS & EQUIPMENT
Professional subscriptions qualify as expense claims only when they are deemed necessary for work or aid in carrying out the employee’s contract. Same goes for any material or equipment purchased.
Personal expenses (i.e. protective clothing or miscellaneous paraphernalia employees need on the job), eye tests (since most umbrella employees sit in front of a computer for long periods of time), insurances, donations to charity and contributions to pension.
The range and value of allowable expenses varies from client to client and it’s best to hash out all of the particulars with your clients to avoid any confusion.
For more information on claiming expenses under ABC Portage, contact one of our consultants today.