HMRC looking to curb travel expenses for self employed?
Discussion
GT03ROB said:
Dr Jekyll said:
If you think contractors are getting a better deal than you, then go contracting.
...and if you think staff get a better deal than contract, go staff......If changes in the rules mean contractors get a worse deal then I'll go staff. You are the one whinging that life is unfair.
FredClogs said:
The bottom line is that if a Ltd company is contracted to another company to provide a service then the provision of that service and expenses accrued therein are an expense of that Ltd company, not an employee of that Ltd company.
I think all umbrella firms should be much more heavily regulated and the people working through them made aware of what their positions are - but if you run a Ltd company as a director be you a painter, plumber, IT consultant, mobile dog groomer or management consultant the business you do and the expenses you accrue are the companies, nothing else makes any sense.
Agree, I'm going LTD soon and if the new rules only affect the employee rather than the company then its not much to worry about.I think all umbrella firms should be much more heavily regulated and the people working through them made aware of what their positions are - but if you run a Ltd company as a director be you a painter, plumber, IT consultant, mobile dog groomer or management consultant the business you do and the expenses you accrue are the companies, nothing else makes any sense.
If not them a permie roll beckons.
GT03ROB said:
Tuna said:
If we're treated the same way as everyone else, can we please have paid holiday entitlement, free training courses, health cover, at least three months paid notice, child leave etc. etc. etc.
You do. It's in your rate. Thats why contract hourly rates are around double the staff equivalent.I have no problem with contractors and recognise that they are an important part of the workforce and their flexibility is a major plus point. Being able to claim back expenses for something that no one else can where there is no differentiator however is not cricket. If the contract isn't worth the cost of travel to get there then you don't accept it, just like I would not accept a job that isn't covering my travel that I can't claim back.
Dr Jekyll said:
GT03ROB said:
Dr Jekyll said:
If you think contractors are getting a better deal than you, then go contracting.
...and if you think staff get a better deal than contract, go staff......If changes in the rules mean contractors get a worse deal then I'll go staff. You are the one whinging that life is unfair.
Actually I'm not whinging as I don't pay tax on my income.
Rude-boy said:
GT03ROB said:
Tuna said:
If we're treated the same way as everyone else, can we please have paid holiday entitlement, free training courses, health cover, at least three months paid notice, child leave etc. etc. etc.
You do. It's in your rate. Thats why contract hourly rates are around double the staff equivalent.Moonhawk said:
Rude-boy said:
GT03ROB said:
Tuna said:
If we're treated the same way as everyone else, can we please have paid holiday entitlement, free training courses, health cover, at least three months paid notice, child leave etc. etc. etc.
You do. It's in your rate. Thats why contract hourly rates are around double the staff equivalent.GT03ROB said:
....and its why the rate is double the staffer....
Yep. Besides it's a little disingenuous to talk about flat hourly rates when comparing a staff job to a contract one.What we should be talking about is "total package" (including all company pension contributions, bonuses, share options, holiday pay etc etc).
If you worked out the actual monetary value of a staff job then broke this down into a "total package" hourly rate - it would be much higher than base hourly rate would suggest and i'm sure in doing so - you would find that the staffer and the contractor were actually much closer in monetary terms than their base hourly rates would suggest - especially once you took account of all the things the contractor has to pay out of their hourly rate that a staffer does not.
Edited by Moonhawk on Tuesday 28th April 14:55
oyster said:
Dr Jekyll said:
So if I get a 6 month contract at a site 200 miles away, it's no longer worthwhile because of the non deductible travel expense, so I'll sit at home paying no tax at all.
The animosity by HMRC towards anyone who could be vaguely described as self employed is verging on the unhinged.
Depends if that's your only client? The animosity by HMRC towards anyone who could be vaguely described as self employed is verging on the unhinged.
If it is, I'm not convinced you're actually running a business. Neither, as it seems, is HMRC. Hence the change in the rules.
Moonhawk said:
Yep. Besides it's a little disingenuous to talk about flat hourly rates when comparing a staff job to a contract one.
What we should be talking about is "total package" (including all company pension contributions, bonuses, share options, holiday pay etc etc).
If you worked out the actual monetary value of a staff job then broke this down into a "total package" hourly rate - it would be much higher than base hourly rate would suggest and i'm sure in doing so - you would find that the staffer and the contractor were actually much closer in monetary terms than their base hourly rates would suggest - especially once you took account of all the things the contractor has to pay out of their hourly rate that a staffer does not.
Maybe in a bank or an insurance company, but not in the real worldWhat we should be talking about is "total package" (including all company pension contributions, bonuses, share options, holiday pay etc etc).
If you worked out the actual monetary value of a staff job then broke this down into a "total package" hourly rate - it would be much higher than base hourly rate would suggest and i'm sure in doing so - you would find that the staffer and the contractor were actually much closer in monetary terms than their base hourly rates would suggest - especially once you took account of all the things the contractor has to pay out of their hourly rate that a staffer does not.
Edited by Moonhawk on Tuesday 28th April 14:55
And everyone knows that one of the biggest perks going is to somehow become home based, therefore all of your mileage becomes business miles, whereas as an office or site based employee you cannot do this.
Edited by Adrian W on Tuesday 28th April 15:02
Rude-boy said:
Being able to claim back expenses for something that no one else can where there is no differentiator however is not cricket. If the contract isn't worth the cost of travel to get there then you don't accept it, just like I would not accept a job that isn't covering my travel that I can't claim back.
So permanent staff don't claim travel expenses when their company sends them away? Must have changed since my day. 
Rude-boy said:
GT03ROB said:
Tuna said:
If we're treated the same way as everyone else, can we please have paid holiday entitlement, free training courses, health cover, at least three months paid notice, child leave etc. etc. etc.
You do. It's in your rate. Thats why contract hourly rates are around double the staff equivalent.I have no problem with contractors and recognise that they are an important part of the workforce and their flexibility is a major plus point. Being able to claim back expenses for something that no one else can where there is no differentiator however is not cricket. If the contract isn't worth the cost of travel to get there then you don't accept it, just like I would not accept a job that isn't covering my travel that I can't claim back.
Yes, contractors' rates are higher; certainly the risk/reward ratio suits different people, and for sure there are some particularly terrible contractors, just as there are some spectacularly bad permanent members of staff. The only thing I object to is when people (permanent or contract) concentrate solely on the money and do this weird value judgement that just because there is a difference in rates something is inherently unfair.
Personally I will absolutely decide if a contract some distance from home is 'worth it' based on some combination of the work involved, the people, the skill development, the inconvenience of travel and the rate. My point is purely that as someone who has worked hard to develop a valuable and relatively rare skillset, it benefits both my client and myself to be able to travel cost effectively.
The difference is that if I took a permanent role with a company and then chose to live a hundred miles away, that's clearly a lifestyle choice. If as a business I commit to servicing clients (occasionally for extended periods of time) within a hundred miles of my home, that's a business choice.
Obviously there's a line where the 'many clients' becomes 'one client' and the 'running a business' becomes 'working for another organisation'. There are loads of tests to decide where the line should be drawn, and the 2 year rule for travel expenses seems a reasonable (if a bit arbitrary) part of that. Changing that towards 'no such thing as remote clients' seems harsh. Even if you justify it by whinging about how much contractors earn.
Adrian W said:
Maybe in a bank or an insurance company, but not in the real world
I have worked "in the real world" for many companies that weren't banks or insurance companies.All of the ones I worked for paid between 10-15% annual performance related bonus. They all had "share save" schemes whereby shares were offered at a reduced rate to employees (and you pay no tax if they are left in the scheme for 5 years). All paid annual holidays, sick leave and pension contributions worth a minimum of 8% salary etc
When you tot all of this up (and more) - how much additional does it represent over your salaried hourly rate?
Moonhawk said:
The contractor (via their limited company) has to pay employers national insurance, corporation tax, fund their own pension, pay their own holidays, make provision for sickness etc.
They don't have to pay employers NI. Set the salary to £670 a month and pay the rest as dividends. They may have to pay NI on expenses but not on income.Question for the Ltd Co peeps.
I am thinking of contracting soon.
Do you all have to list these travel expenses on your annual self assessment return?
Is there a different if your company pays it direct (by company card etc), or you pay it out of your own pocket and reclaim it from the company. Do they still have to be disclosed as an income?
I am thinking of contracting soon.
Do you all have to list these travel expenses on your annual self assessment return?
Is there a different if your company pays it direct (by company card etc), or you pay it out of your own pocket and reclaim it from the company. Do they still have to be disclosed as an income?
Rude-boy said:
GT03ROB said:
Tuna said:
If we're treated the same way as everyone else, can we please have paid holiday entitlement, free training courses, health cover, at least three months paid notice, child leave etc. etc. etc.
You do. It's in your rate. Thats why contract hourly rates are around double the staff equivalent.I have no problem with contractors and recognise that they are an important part of the workforce and their flexibility is a major plus point. Being able to claim back expenses for something that no one else can where there is no differentiator however is not cricket. If the contract isn't worth the cost of travel to get there then you don't accept it, just like I would not accept a job that isn't covering my travel that I can't claim back.
I earn about £17/ph, and am charged out to different cost centres at around £35/ph, to cover annual leave, sickness, training etc...
If I was a contractor I'd be charging my services out at £40/45/ph, and paying my own pension, training costs etc.
Contractors should just take travel costs into consideration of the job, to an agreed fixed location, travel from there onward shouldn't be taxed.
I didn't get tax relief commuting from MK to derby for 2 years and just sucked it up. I knew where the job was based when I took it.
If I was a contractor I'd be charging my services out at £40/45/ph, and paying my own pension, training costs etc.
Contractors should just take travel costs into consideration of the job, to an agreed fixed location, travel from there onward shouldn't be taxed.
I didn't get tax relief commuting from MK to derby for 2 years and just sucked it up. I knew where the job was based when I took it.
Gassing Station | News, Politics & Economics | Top of Page | What's New | My Stuff