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Can someone please explain expenses to me, it doesnt seem fair!!

Discussion in 'Employment & Jobs' started by millsie, Jan 22, 2014.

  1. millsie

    millsie Byte Poster

    Hi all,

    I am very new to contracting and have just received the payslip for my first full weeks work.

    I am totally confused and maybe someone who is already a contractor can explain it to me?

    Basically I have been told I can claim expenses for mileage and parking and for the last 2 weeks I have put a claim in each week for around £130 for all my mileage and parking to carry out my 'assignment'.

    Now what they seem to do is say for example I got £1000 for the week (not what I earnt but only for example) this being the exact total when you add up the hourly rate and multiply the hours worked.

    Then they deduct the amount for the expenses to reduce my pay down to eg. £870 gross, they then deduct the tax etc and their fee but then pay me back only £90 in expenses!! This just doesnt seem right, they are expenses I get paid for but they deduct them from my total pay!! I have already shelled out in advance from my own money to pay for the fuel and parking and all they are doing is just deducting this from my salary and then paying it back, how am I benefiting from that?!!

    Can anyone try and explain it in laymans terms?


    Millsie :blink
    Certifications: N+, CCNA, MCDST
    WIP: CCNP route 642-902
  2. SimonD
    Honorary Member

    SimonD Terabyte Poster

    Expenses are used to offset tax you pay to the VAT man, you don't actually get them back as such.
    Certifications: CNA | CNE | CCNA | MCP | MCP+I | MCSE NT4 | MCSA 2003 | Security+ | MCSA:S 2003 | MCSE:S 2003 | MCTS:SCCM 2007 | MCTS:Win 7 | MCITP:EDA7 | MCITP:SA | MCITP:EA | MCTS:Hyper-V | VCP 4 | ITIL v3 Foundation | VCP 5 DCV | VCP 5 Cloud | VCP6 NV | VCP6 DCV | VCAP 5.5 DCA
    WIP: VCP6-CMA, VCAP-DCD and Linux + (and possibly VCIX-NV).
  3. millsie

    millsie Byte Poster


    Yep, Cheers Simon, I realised this after investigating!

    So they deduct the amount for the expenses from my total pay to offset the tax, then pay me them back so am just paying less tax, makes sense.

    Cheers anyways

    Certifications: N+, CCNA, MCDST
    WIP: CCNP route 642-902
  4. Mr_Cellophane

    Mr_Cellophane Nibble Poster

    If you put in a claim for £130 and your umbrella company only gives you £90, then you are being ripped off. This is why I went Ltd. My accountant cost less than I was giving the unbrella and I get to keep more of my money away from HMRC.
    Certifications: MCSE, MCDST, MCNE, PRINCE 2 and ITIL
    WIP: MCSE 2003

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