More from our Contractor Expenses Guide
Dispensations – What is an Expenses Dispensation?
A dispensation allows an employer to reimburse certain expenses without the need for the employee to submit receipts. It is intended to reduce administration costs for the employer; it is not a license to claim for expenses that have not been incurred. For example, a dispensation might say that an overnight stay can be reimbursed at the rate of £80 without the need for a receipt. Although your overnight stay may have only cost £70, your employer can reimburse you at the rate of £80. What is crucial is that you have incurred the cost of an overnight stay. If you had not, you would not be entitled to claim anything. The rate of £80 is acceptable because it has been set in consultation with HMRC. They will have agreed that the cost is a reasonable average and that some employees will incur more and some less but that overall it will average out over time.
Can I claim expenses if my contract is within IR35?
Yes you can. There are 2 ways of doing this:
- HMRC give you an allowance of 5% of your contract as tax deductible expenses.
- You can claim any other expense that would have been tax deductible if you had been employed directly by your client such as:
- Allowable travel and subsistence.
- Computer costs.
- Training.
If you are unsure about any of the details laid out in this contractor expenses guide, please discuss this with your tax adviser.