Reimbursed expenses have become somewhat complex to process, so we have summarised below the rules that apply in line with NASA's expense policy.
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Reimbursed expenses generally refer to costs incurred while conducting business activities, such as travel expenses for business trips, meals during work-related meetings, or ad hoc one-off expenses such as stationery. |
It is a common misconception that if the client reimburses an expense via an agency & umbrella company that these expenses can be automatically processed tax free when paid out. This is not always the case.
The umbrella company is responsible for verifying the expense, and checking that certain criteria are met, and claims are submitted alongside clear, dated VAT receipts. Reimbursed expenses for regular commuting, for example, would not qualify as a tax free expense. This would mean although the expense would be refunded, the umbrella company will apply tax at source alongside your usual salary.
Here are some key characteristics of a commute, and what might mean an expense becomes taxable income.
- Fixed Location: A regular workplace is typically a fixed physical location, such as an office building, a store, a factory, or any other specific site where the employee is required to carry out their job duties.
- Frequency: The employee visits the regular workplace regularly, often on a daily or recurring basis. It is the place where they usually start and end their workday.
- Employer Control: The employer exercises control and supervision over the employee's work at the regular workplace.
For an umbrella company to be able to process a reimbursed expenses tax free, it needs to be confirmed that this is an extraordinary journey, and is for a temporary purpose.
If you expect to incur these types of costs for one off expenses, then you can claim these via the reimbursed expense form linked here.
The payroll team will review all items that are received, and should these be deemed a regular commute or non-extraordinary journey, they will become taxable.
For more information please contact expenses@nasagroup.co.uk.