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Exactly what expenses you can claim depends on whether your contract is captured by the IR35 legislation. Broadly speaking, you will be able to claim more expenses if you are working on contracts that are outside IR35.

If you decide to setup a PSC you can claim for the following expenses depending on if the contract is within the scope of IR35 or not. You may also wish to look at our comprehensive guide to contractor expenses.

Claimable expenses in a PSC if a contract lies within IR35

  • Your gross salary - this would need to be calculated in accordance with the IR35 regulations
  • Direct business expenses incurred during the carrying out of your contract
  • Travel expenses to and from your place or work and the client site if the contract if for less than 24 months
  • Administration expenses (limited to five per cent of the gross fees receivable).

Claimable expenses in a PSC if a contract lies outside IR35

  • Your gross salary - this would usually be kept low, in order to maximise dividends payable to yourself as shareholder (thereby avoiding employees and employers NICs).
  • Spouse's salary - which must be actually paid and not unrealistic, having regard to the duties performed.
  • Any magazine, subscriptions, courses or books that are relevant to your contract work.
  • Bank interest and charges on the company bank account.
  • Business telephone calls.
  • Travel expenses.
  • Accommodation and subsistence.
  • Payments to a HRMC approved pension scheme.
  • Insurance related to the business (professional indemnity, contents etc.).
  • Computer costs.
  • Accountancy costs.

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