CONTRACTOR EXPENSES GUIDE

The amount of allowable expenses will depend to a large extent on your IR35 status — and, since 2017/2021, on who is responsible for determining that status.

If your contract is caught by IR35, the expenses claimable before calculation of the deemed salary depend on whether your own company is still responsible for the IR35 determination:

If your company determines your status (typically because your end client is a small business — note the size thresholds increased again from 6 April 2026 — or based wholly overseas):

• 5% of net sales (flat-rate allowance, no receipts needed)
• Travel and accommodation expenses
• Pension contributions
• Professional subscriptions

If your medium or large end client determines your status and decides you're inside IR35, they or the agency will typically deduct tax at source via PAYE. The 5% allowance is no longer available in this case. You may still be able to claim certain specific expenses (such as pension contributions made by your company) separately from the deemed payment calculation — worth checking with us on a case-by-case basis, as this area is more restrictive than it used to be.

Contractor Pages ► Contractors & Freelancers ■ IR35 & Personal Service Companies ■ IR35 Advice ■

■ IR35 Employment Status ■ Advantage of Separate Contracts for Each Project ■ IR35 Case Law ■

■ Engaging as Employee or Contractor ■ IR35 Status Review ■ Contractor Expenses Guide ■

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Adrian Mooy & Co is the trading name of Adrian Mooy & Co Ltd.  Registered in England No. 05770414