How to Become a Contractor Part Three: Claiming Expenses
Welcome back to the third instalment of our ‘How to Become a Contractor’ series. Last time we explored how much tax contractors pay and explained if you are entitled to social welfare as a contractor.
This week, Icon Accounting Operations Director, Claire Fagan will discuss what type of business expenses you can claim as a contractor, including relocation expenses.
Tax relief may be granted on business expenses that are wholly, exclusively and necessarily required for the purposes of a contract, says Claire.
Firstly, it is imperative that all business expenses claims are supported by receipts which must be maintained for a period of six years as per the Revenue Commissioner’s guidelines. It is also important that business expense claims are clearly justifiable and are a necessary requirement to fulfil the duties of the contract.
Secondly, business expenses can often be open to much personal interpretation, and for this reason, it is essential to seek professional guidance as to what expenses are deemed allowable. Contractors business expense claims can vary, depending on the nature of contract work. However, below are some examples of business expense claims:
- Mobile & internet
- Postage & stationary
- Public transport/Tax-saver ticket
- Training courses
- Business equipment
- Utility expenses
- Travel & subsistence
Where it is necessary to relocate for a contract, contractors may also be entitled to claim relocation expenses. This includes the ability to claim tax relief on:
- The vouched travel costs to Ireland
- Removal costs
- Accommodation costs for the first three months of a specific contract
For contractors who have relocated specifically for a contract but have not sourced accommodation; a subsistence rate of €133.73 per night may be permitted for the first ten nights of the contract.
Where a contractor has relocated to Ireland, the vouched fuel costs may be permitted as a business expense for the initial trip to the place of relocation. It is vital that the relocation is of a significant distance.
How can I find out more?
In summary, to fully assess what option is best for you as a contractor, it is recommended to speak with an accountancy provider specialising in Umbrella Company/Personal Limited Company solutions. For more information, visit Icon Accounting today.