Umbrella Company - Cycle Mileage

[Scruffmonster]

Hi,

I'm using an umbrella company for the first time and I have a question.

Which will leave me better off?

1. Buying a £70 a week travelcard
2. Cycling 250 miles a week @ £0.20 per mile? (£50 per week)

Leave all thoughts of fitness, dead legs etc aside. I'm talking pure cash. I've spoken with two people from the Umbrella company and I can't get a straight answer.

I do not get re-imbursed £70, or £50 a week, do I? These are just used as pre tax deductions?

I'm using Giant and they're very sales orientated, keen to point out how much I could theoretically earn but impossible to pin down for exact answers. They always want to follow up on email.

Help appreciated,

Cheers

 

[fossyant]

Assuming you can legitimately use the 'cost' as a deduction (lots of wheezes with these umbrealla companies) this will be counted as a business expense, so reduces your tax/NI liability. Think about it, the rail ticket is more so you'll save 'more' on tax.

BUT, you are paying for a £70 ticket - if you cycle you are not paying out anything, so in effect save the £70 less the slight difference in tax and NI between the £70 and £20 - say £6 tax/NI depending upon rate etc.

Cycle - you'll be better off

 

[ASC1951]

Hi,

I'm using an umbrella company for the first time and I have a question.

Which will leave me better off?

1. Buying a £70 a week travelcard
2. Cycling 250 miles a week @ £0.20 per mile? (£50 per week)

Bear in mind that you can only claim the mileage allowance for bike journeys at work, not to work. The situation isn't quite as straightforward for contractors who may have a succession of clients, but if you are working at the same site for week after week your journeys there from your home don't strictly qualify for MA.

Not that I have ever known HMRC query a bicycle claim. Cars, yes.

 

[fossyant]

Bering an umbrella company they will be recovering home to work. This assumes the op is just contracting, then it is allowable. I assume the op won't be at the same business too long.

 

[Scruffmonster]

Assuming you can legitimately use the 'cost' as a deduction (lots of wheezes with these umbrealla companies) this will be counted as a business expense, so reduces your tax/NI liability. Think about it, the rail ticket is more so you'll save 'more' on tax.

BUT, you are paying for a £70 ticket - if you cycle you are not paying out anything, so in effect save the £70 less the slight difference in tax and NI between the £70 and £20 - say £6 tax/NI depending upon rate etc.

Cycle - you'll be better off

Fabulous. Thank you. This is exactly what I thought. Why they couldn't be that transparent is beyond me. I don't know if he simply didn't understand the question or whether me putting the biggest billable number on the invoice made them more money?... I suspect it was the latter but who knows. I did ask them for a cost illustration of 1 train day at £20 and 4 cycle days but I got silence...

Whatever, I'm on my bike, 'Earning' 20 pence a mile and getting some halway decent legs in the bargain.