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IT contractor expenses - what can you claim for?

Posted Feb 11, 2009

IT contractors are allowed to claim back expenses they have incurred during their business duties. This article looks at some of the most common expenses you might incur as a contractor.

The golden rules for expenses is that you can only claim for expenses you incur wholly and exclusively in the course of your contracting work.

There are many 'grey areas', so you should always check with your accountant if you are unsure about the validity of your expense claims.

These expenses are likely to apply whether you operate via a limited or umbrella company.

Typical contractor expenses

- Professional fees, such as your accountant or solicitor.
- Your salary (and spouse, if applicable)
- Business insurance, e.g. PI cover, public liability, tax investigation
- Computers, laptops, other equipment
- Cost of business phone calls, broadband
- Business travel and accommodation costs
- Executive pension contributions
- Subscriptions to professional magazines
- Cost of postage, stationary
- Travel expenses
- Accommodation expenses (and subsistence)

IR35 and the 5% allowance

If you are a limited company contractor, and your contract work is caught by the IR35 rules, you are provided with a fixed '5% allowance' which is intended to cover administrative expenses.

This expenses allowance is a flat rate deduction of 5% of the gross fees receivable for any relevant contracts.

You can find out more about the '5% allowance' in our dedicated article, IR35 deemed payment and the treatment of expenses.

You may also wish to refer to the IR35 expenses FAQ on the HMRC website.

Final considerations

You should always ensure that any expenses you claim are genuine and were incurred solely for business purposes, and you should always keep receipts for any expenses you claim.

If you're in any doubt, ask your accountant for advice.

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