Transfer for FREE Between ContractorUmbrella and Dolan Accountancy

Find Out More

Umbrella Company Expenses

**** Expenses and Umbrella Companies Post 6th April 2016: Please note as of 6th April 2016, no "compliant" umbrella company will be able to process non-chargeable expenses for tax relief purposes due to a change in Legislation included within the Finance Act 2016. Click here to find out more... ****


With an umbrella company you will be working under a Contract of Employment and you may be entitled to claim certain expenses. However, some umbrella companies may assume an amount when giving you an estimation of your earnings in order to make their take home pay appear higher than it would be working through a different umbrella company.

The fact of the matter is that we are all at the mercy of HMRC - they determine how much you should pay in tax and they also determine what is and what is not allowable as an expense, not your umbrella company. 

If you have an Umbrella Company or spoken to your friends and colleagues about Umbrella Companies you will, almost certainly, have heard the term ‘dispensation’ when the subject of expenses is raised. So, what exactly is a dispensation?

Well, HMRC’s definition is “a dispensation is a notice, issued by an Inspector, which relieves you from reporting details of expenses and benefits on forms P11D or P9D” 

According to some Umbrella Companies, a dispensation is a great way for contractors to increase their take home pay without even having to pay out for any ‘expenses’ in the first place.

The first explanation only helps if you know what a P11D or P9D is; the second sounds great but is totally misleading.

So what is a dispensation?

Almost all Umbrella Companies have them because they save time and therefore money. If you don’t apply to HMRC for a dispensation, you have to record every single expense that every single contractor claims on a form which is called a P11D; as well as that every single expense has to be accompanied by a receipt.

So, can you claim whatever is on the Umbrella Company’s dispensation as an expense every day even though you haven’t spent anything?

No, unfortunately you can't. You can only claim as an expense what you have actually spent and you must have incurred the cost as a result of the work that you are doing. In order to be allowable there must also be no 'duality of purpose' which means that your purchase must only be used for the contract e.g. the cost of a new suit would not be allowable as you could wear it to go out on a Saturday night as well as wear it to work and therefore it has more than one use.

Is the dispensation the ‘HMRC approved’ expenses policy that you keep hearing about?

No. HMRC don’t approve anything – let alone expenses policies! The dispensation is just to save time.

For more information on what expenses you can or can’t claim through an Umbrella Company, please call 01206 713680 or, if you would like to ask, a question please email

Click here to read our latest reports on dubious expense claims and 100% take home pay claims.

Why Choose ContractorUmbrella?

ContractorUmbrella is the hassle-free, straight talking umbrella company that provides umbrella employment for UK based contractors and freelancers. Independently voted as the best umbrella company by the readers of Contractor UK.

As one of the most trusted umbrella companies in the UK, we guarantee our employees peace of mind, absolute compliance and complete security. We are one of the longest standing and most respected umbrella companies in the UK.

Benefits of working through ContractorUmbrella;

  • Fast and easy registration - be ready to work in 24 hours, simply register online and we’ll take care of the rest.
  • Calculate your take home pay - use our online calculator to find out how much you could be taking home through ContractorUmbrella.
  • Same day payments - we offer same day payments as standard, for no additional fee.
  • Our Commitment Charter- is our guarantee that you will be looked after at every step of the way.
  • Flexible Limited Company Accountancy - when you sign up to our sister company Dolan Accountancy, you can transfer to ContractorUmbrella when umbrella employment better suits or your assignment sits inside IR35.
  • Employee Benefits - at ContractorUmbrella there are many benefits available to you as our employee including our Employee Rewards Scheme, Group Pension Scheme, Foreign Currency Exchange, Contractor Accommodation, Contractor Mortgages and much more.
  • Personal Employee Liaison Officer - we believe in the personal touch, so you will have your very own dedicated Employee Liaison Officer during your employment with us. Read some of the glowing testimonials we've received about our lovely staff and the outstanding commitment they give to all our employees and clients.

If you’d like to find out more, call us on 01206 591 000 or request a call back by completing our online form.