HMRC looking to curb travel expenses for self employed?

[Moonhawk]

Mandalore said:

Do you all have to list these travel expenses on your annual self assessment return?

I employ an accountancy firm to do this.

I submit an expenses sheet to them with scans of all receipts each month. They provide a summary to HMRC with my company tax return and I guess the breakdown/receipts are available should HMRC inspect my records.

[Adrian W]

Mandalore said:

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?

yes and above a level it is treated as a benefit and taxed (which is unfair) if you have a fuel card it is taxed as a benefit. All on your P11D

[0000]

JB! said:

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.

And when they sent you on from Derby to elsewhere did you not claim expenses?

[JB!]

0000 said:

JB! said:

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.

And when they sent you on from Derby to elsewhere did you not claim expenses?

Paid for by the company, read what I said, Home to one location shouldn't be tax free, if the contractee sends you elsewhere then its down to your agreement with them who picks up the tab.

[TEKNOPUG]

JB! said:

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.

That's fine. As I say, contractor rates will just go up to cover the difference.

I have a basic day rate, which is applicable if I spend the whole day sitting on my sofa. If not, then the rate increases depending upon distance, location, travel costs, hotel costs, subsistence costs, time away from home, inconvenience etc. If there is no tax releif on travel expenses, then the rate increases further.

[Moonhawk]

JB! said:

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.

Surely that argument applies to pretty much any 'travel to the job' expense then?

Every industry based on "contract" type work (building, plumbing, gardening, engineering etc) - the contractors always know where the job is when they take it on - regardless of whether its for 10 minutes or 10 months.

[JB!]

TEKNOPUG said:

JB! said:

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.

That's fine. As I say, contractor rates will just go up to cover the difference.

I have a basic day rate, which is applicable if I spend the whole day sitting on my sofa. If not, then the rate increases depending upon distance, location, travel costs, hotel costs, subsistence costs, time away from home, inconvenience etc. If there is no tax releif on travel expenses, then the rate increases further.

Seems reasonable to me

[0000]

JB! said:

Paid for by the company, read what I said, Home to one location shouldn't be tax free, if the contractee sends you elsewhere then its down to your agreement with them who picks up the tab.

What if I go from home to my rented office and then to the client's main office? Do they both count as the one location or would it be ok to expense from my office to the client's?

[JB!]

0000 said:

JB! said:

Paid for by the company, read what I said, Home to one location shouldn't be tax free, if the contractee sends you elsewhere then its down to your agreement with them who picks up the tab.

What if I go from home to my rented office and then to the client's main office? Do they both count as the one location or would it be ok to expense from my office to the client's?

Home to your office is a normal commute and shouldn't be tax free.

Your office to your client's base; costs should be included in the contract.

Client's base to 2nd site outside of contract; client picks up the tab ontop.

Not rocket science.

[Gecko1978]

0000 said:

JB! said:

Paid for by the company, read what I said, Home to one location shouldn't be tax free, if the contractee sends you elsewhere then its down to your agreement with them who picks up the tab.

What if I go from home to my rented office and then to the client's main office? Do they both count as the one location or would it be ok to expense from my office to the client's?

An thats the point isn't. Your office might actually be the spare room in your house (in my case) which you work out of. Clients might then want you to come vist them on site once a week every day whatever point is its not your place of work its the clients office thus extra cost to your company. Its hard for PAYE employees I think to get it but end of day its a life style choice, higher risk higher reward.

[kev1974]

Many companies lay on (and pay for) transport for their staff to and from work. Sometimes at the workers' bus end of the scale (factory or office might be out of reach of the public transport network), sometimes limo/cab (e.g. city banks / accountants / legal firms where they're working extraordinary hours; early morning tv and radio shows needing their presenters in on time, right through to "ordinary jobs" in theatres and cinemas where the shows finish after public transport finishes).

Do any of these employer-paid types of transport to/from work attract taxation? No I don't think they do.

Certainly I spent a long time in a full time job working on an office park in the middle of nowhere and a series of buses were laid on to get non-car owners there every day. I never paid any tax on that transport to work.

Maybe it's a case of some employers choose to pay for their staff to get to work, some don't, with Contractor Ltd Companies fitting in to the first sort, and HMRC should leave well alone.

[Moonhawk]

I wonder will permanent staff also be hit by this?

For example - I know somebody who has just taken a permanent role on. This role is home based - but requires a certain amount of travel to client sites. They could (in theory) be at the same site for weeks on end.

Also the job requires that they be based out of the company offices for the first 6 months for training.

At the moment - all travel to and from the company office for training purposes as well as all travel to client sites is expensable - however depending on how these rules are changed - could it also have an impact on what permanent workers can and cannot claim too.

At what point will working on a client site or having to go into the company offices for training be considered "a normal commute" - 1 day, 1 week, 1 month?

[ralphrj]

Moonhawk said:

At what point will working on a client site or having to go into the company offices for training be considered "a normal commute" - 1 day, 1 week, 1 month?

Back in 2009 HMRC audited the company I worked at and said that if all sales staff had to attend the office every Monday for a sales meeting then it was travel to a permanent place of work and not claimable.

They also said that:

1. The place of work written into a contract is irrelevant, it is the actual travel that counts. If your contract says that your permanent place of work is X but you regularly travel to Y then you can't claim travel expenses.

2. You could have multiple permanent places of work. If you always work at either X or Y then both could be considered permanent places of work.

The key part seemed to be regularity. If it was regular and predictable travel then it isn't claimable. If it is irregular then it is.

[FredClogs]

Moonhawk said:

I wonder will permanent staff also be hit by this?

For example - I know somebody who has just taken a permanent role on. This role is home based - but requires a certain amount of travel to client sites. They could (in theory) be at the same site for weeks on end.

Also the job requires that they be based out of the company offices for the first 6 months for training.

At the moment - all travel to and from the company office for training purposes as well as all travel to client sites is expensable - however depending on how these rules are changed - could it also have an impact on what permanent workers can and cannot claim too.

At what point will working on a client site or having to go into the company offices for training be considered "a normal commute" - 1 day, 1 week, 1 month?

Indeed they will, as I said in my first post above the current "two year rule" on what classes as a "temporary" place of work was based on HMRCs own internal rules on what they do with staff who are seconded or transferred to other offices, i.e they would pay expenses for the first two years or the point at which the staff member new the placement would last over 2 years.


What people are still misunderstanding is that it's not the employee or director of a Ltd company who is gaining tax relief here, it is the Ltd company who is claiming the expense as a business cost, to change this set up you'd need to restructure completely Ltd company regulations and how they treat their staff, be they directors or otherwise.

[Greg_D]

Studio117 said:

I pay to get to work, I pay for 2 sets of NI. I get no paid holidays, no sick pay and pay the usual income tax.

Your umbrella is your employer, full stop, you get paid holiday and sick pay, 100% the fact that you get it rolled back into this weeks pay makes no difference, you still get it (unless you are with the shonkiest PoS uncompliant umbrella
)

[Studio117]

Greg_D said:

(unless you are with the shonkiest PoS uncompliant umbrella
)

Quite possibly!

[Rude-boy]

Tuna said:

You mean as a permanent member of staff you can't claim travel expenses from your company and get a benefit from doing so? I thought you could.

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.

Firstly, and a small point of order here, I have absolutely no issue with the daily rates and so on. Contractors cost more as a single bill but are not much more expensive than a full timer (outside some specialists who would never get a full time job doing what they do as they are only needed a few days/weeks/months a year so it is easy to see why they might be telephone numbers per day).

What I have a small issue (it really doesn't exercise me, just a bit of a niggle) with is that many contractors call their spare room their office and then are going to work on one site, for one employer, for weeks and often months at a time and then claiming travel expenses based on that. There is an inequality there which is not easily swallowed. Especially by those of us who would love to work like contractors but are legally and practically prevented from doing so.

[supersingle]

TEKNOPUG said:

That's fine. As I say, contractor rates will just go up to cover the difference.

I have a basic day rate, which is applicable if I spend the whole day sitting on my sofa. If not, then the rate increases depending upon distance, location, travel costs, hotel costs, subsistence costs, time away from home, inconvenience etc. If there is no tax releif on travel expenses, then the rate increases further.

It's all money out of your business/labour. There comes a point where the service you deliver is no longer worth the cost to the client.

There's only so much the government can take before the well runs dry.

[Greg_D]

don't forget Rude Boy that they are only claiming tax relief on the travelling element, they have still spent the money on the petrol. They aren't 'making money' on that element, just mitigating the loss to some extent.

given the choice between working 5 miles from home and not claiming anything and travelling 60 miles to work and claiming £19 worth of tax saving (on C.£15 of actual petrol cost) i know which i'd rather endure...

[Moonhawk]

Rude-boy said:

What I have a small issue (it really doesn't exercise me, just a bit of a niggle) with is that many contractors call their spare room their office and then are going to work on one site, for one employer, for weeks and often months at a time and then claiming travel expenses based on that. There is an inequality there which is not easily swallowed. Especially by those of us who would love to work like contractors but are legally and practically prevented from doing so.

But it's swings and roundabouts surely. As a permanent employee - you may not be able to claim travel expenses for your commute, but you do gain access to other benefits not available to the contractor.

If we are going to 'level the playing' field WRT to travel expenses - then why not all these other things?

Edited by Moonhawk on Tuesday 28th April 16:57