My agency say they pay expenses, but what they do is take the amount of expenses from my pay to reduce the income tax. They then add it back on but I don’t actually get any money. Is this right?
This practice is more common amongst Umbrella companies. What the agency is doing is giving immediate tax relief to expenses of employment by deducting these from gross pay & thereby the contractor pays less tax. The alternative would be, as in the case of ‘normal’ employment situations, for the agency to refund expenses in full, provided they have incurred wholly, exclusively & necessarily in the course of the employment, & to deduct a higher amount of tax from gross pay. Here though no tax relief is available to the employee for the expenses incurred.
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