In this blog, we focus on informing our client base, along with those considering contracting too, what eligible expenses they can claim to operate more efficiently. Read on to discover the top expenses we are asked about, and how claiming expenses can contribute to maximizing your take-home pay.
As National Bike to Work Day takes center stage in May, you may have seen on our social channels how we highlighted how contractors can claim the Bike to Work Scheme, allowing them to make savings along with investing in their health and a greener future too. In this blog, along with highlighting and encouraging the scheme, we are shifting our focus to inform our client base, and those considering contracting in the future too, what other eligible expenses they can claim to allow them to operate more efficiently. Read on to discover the top expenses our dedicated account managers are asked about, and how claiming these expenses can contribute to maximizing your take-home pay.
Bike to Work Scheme
The Bike to Work scheme offers an opportunity to receive tax relief for purchasing a bicycle or electric bike, as well as safety equipment. Through this scheme, you can potentially save up to 52% on the overall cost. The maximum amount eligible for tax relief is €1500 for electric bikes and €1250 for other bicycles. To qualify for the scheme, it's necessary to use the bike primarily for commuting to and from your regular workplace, and you will need to provide written confirmation to verify this. Additionally, individuals can take advantage of the scheme once every four years.
Mobile & Internet Expenses
Contractors can claim tax relief on mobile phone and internet costs that are necessary for their contractual work. When these services are used for both personal and business purposes, contractors must disallow a portion of the costs attributed to personal usage. Generally, a 50% disallowance is recommended, but if a contractor can demonstrate that more than 50% of the bill is related to business activities, they may be able to claim a higher percentage. Proper documentation supporting business-related usage is essential for such claims.
Public Transport
For contractors who rely on public transport to commute to their contracts, Icon Accounting offers the option to purchase monthly tax-saver tickets. These tickets can help you save on your commuting expenses whilst reducing your costs.
Small Benefit Exemption Scheme
Under the Small Benefit Exemption Scheme, contractors have the opportunity to process the purchase of a gift card up to the value of €1000 per year through their payslips. This enables you to enjoy the benefits of tax relief while treating yourself or others to a special gift.
Pension Contributions
Contractors can make pension contributions and take advantage of tax relief through both Umbrella Companies and Personal Limited Companies. By contributing to a pension plan, you not only secure your financial future but also reduce your taxable income, leading to significant long-term benefits.
Business Equipment
Tax relief can be claimed on business assets that are exclusively required for your contractual work. This applies to both the Director Umbrella Company and the Personal Limited Company setups. To ensure a smooth claiming process, it is important to have all receipts for business equipment issued in the name of the Umbrella or Limited Company.
Training Courses
If a contract requires specific training to be completed, you can also claim tax relief on this expense. It is crucial that the courses are directly related to the contractual work and completed within the contract timeframe. Receipts for these courses should be issued in the name of the Umbrella Company. However, it's important to note that non-contract-related courses can potentially be claimed through a personal tax return.
As a contractor, understanding the eligible expenses you can claim is vital to maximizing your pay. By leveraging tax relief opportunities on costs, you can reduce your taxable income and increase your overall earnings. It is important to consult with your dedicated account manager at Icon Accounting to ensure compliance with the necessary documentation and requirements for each expense claim. Empower yourself with knowledge and take full advantage of these eligible expenses to enhance your financial success as a contractor.
For more information on claiming expenses, reach out to your dedicated account manager or the team at Icon Accounting, we’d be delighted to help in any way we can!
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