My Umbrella Company Will Not Reimburse my Fuel Costs

Dear Experts

I have recently started to work through an umbrella company. I have run up a fuel bill of around £1500. The umbrella company has told me that they will not reimburse me for my costs/expenses but instead are going to off set the amount against my tax liability.

I am not happy about this as I still have my full taxable allowance of £7,480 and so I don't see that they have any justification in doing this. I can not afford to keep subsidising them with the price of diesel being £6 a gallon so where do i stand?

What is going to happen when we reach the end of this tax year on 6th April? Are they going to reimburse me then or are they going to hold on to my money and roll it over in to the next tax year? Can you give me any advice?

Thanks

I.

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Hi I

The law requires that where an employee uses their own car for journeys that qualify for tax relief any reimbursement by the employer must be at a mileage rate and this is tax free up to a maximum.

The maximum is currently 45p per mile for the first 10,000 miles and 25p thereafter. The mileage rate is deemed to cover all running expenses - it is not possible for an employer to reimburse actual running costs either in place of or in addition to the milegae rate.

As long as the umbrella company has reimbursed the mileage at those rates there is nothing further they can do.

You say that fuel is £6 per gallon and you have spent £1500 so that is about 250 gallons - at say 30 mpg that is 7,500 miles which at 45p per mile is £3,375. On the assumption that you have covered 7,500 miles then the umbrella company should have paid you £3,375 as a tax free allowance.

What happens is that the umbrella company is your employer and you earn money for your employer. From that the umbrella company will takes its margin account for Employers NIC, pay you tax free expenses and then tax/NIC the balance as your wage.

Bob Jones

Independent Expenses Expert