Discussion
I am fairly new into the world of Freelance work. I am due to do some work which involves overseas travel and I was wondering how it normally works.
E.g. when working in the UK I am paid a day rate for delivering training for a client, the same client wants me to deliver the same training but oversea. What can I charge for days that I am travelling? Do I charge for total number of days away from home x day rate. e.g. 2 days travelling and 3 days training = 5 chargeable days?
I hope the above makes sense.
E.g. when working in the UK I am paid a day rate for delivering training for a client, the same client wants me to deliver the same training but oversea. What can I charge for days that I am travelling? Do I charge for total number of days away from home x day rate. e.g. 2 days travelling and 3 days training = 5 chargeable days?
I hope the above makes sense.
You are now running a business - you are NOT an employee.
As a consequence, you bill your client for the work you do at a sufficient amount to cover all your costs and overheads - that is how businesses make profits.
As a business, you should not really "claim expenses" (like an employee would) but rather charge out your time at a sufficiently high enough rate to cover your costs.
Are you registered for VAT?
As a consequence, you bill your client for the work you do at a sufficient amount to cover all your costs and overheads - that is how businesses make profits.
As a business, you should not really "claim expenses" (like an employee would) but rather charge out your time at a sufficiently high enough rate to cover your costs.
Are you registered for VAT?
Simon-R said:
I am fairly new into the world of Freelance work. I am due to do some work which involves overseas travel and I was wondering how it normally works.
E.g. when working in the UK I am paid a day rate for delivering training for a client, the same client wants me to deliver the same training but oversea. What can I charge for days that I am travelling? Do I charge for total number of days away from home x day rate. e.g. 2 days travelling and 3 days training = 5 chargeable days?
I hope the above makes sense.
The short answer is - it depends on what you can get away with E.g. when working in the UK I am paid a day rate for delivering training for a client, the same client wants me to deliver the same training but oversea. What can I charge for days that I am travelling? Do I charge for total number of days away from home x day rate. e.g. 2 days travelling and 3 days training = 5 chargeable days?
I hope the above makes sense.
The long answer is - you look at all the time and work involved and you decide what you feel is a fair compensation for that work. For example your day rate might be £500. However you might be happy charging travel time at 50% or less. There are lots of factors involved.
Eric Mc said:
You are now running a business - you are NOT an employee.
As a consequence, you bill your client for the work you do at a sufficient amount to cover all your costs and overheads - that is how businesses make profits.
As a business, you should not really "claim expenses" (like an employee would) but rather charge out your time at a sufficiently high enough rate to cover your costs.
Are you registered for VAT?
Some companies are strange. They expect contractors to be limited by their own in-house T&S policies and so want to see expenses itemised separately.As a consequence, you bill your client for the work you do at a sufficient amount to cover all your costs and overheads - that is how businesses make profits.
As a business, you should not really "claim expenses" (like an employee would) but rather charge out your time at a sufficiently high enough rate to cover your costs.
Are you registered for VAT?
Simon-R said:
I am fairly new into the world of Freelance work. I am due to do some work which involves overseas travel and I was wondering how it normally works.
You have two main options.One is to quote and bill the work on a 'Lump Sum' basis. This includes your fees, travel and all other related expenses. This can be useful in making additional margins from a job. For example, you may quote on the basis of Business Class flights and a 5-Star hotel but fly economy and stay in a budget hotel.
The second is to quote a day rate plus travel costs and a per-diem. A per-diem is an agreed daily rate to cover accommodation and sustenance. As above, it's up to you whether you spend it all but the point is that you can charge it all.
It's likely that the choice will be defined by the client but if you have any control on this, I would recommend the Lump Sum option as it affords greater flexibility and greater opportunity to earn additional profit on the work. As a general rule of thumb, travel days are rarely chargeable or if they are, chargeable at a lower rate. Working on a Lump Sum basis allows you the ability to claw back a bit more for travel days than you might otherwise.
As Eric mentioned, you mustn't think in terms of 'claiming expenses'; Such expenditure in the context of Freelance working is 'cost of sale' on which you are entitled to earn a margin (whether you are able to is another matter).
A few quick tips:
Don't forget to include within your costing and quotes, provision for UK airport expenses; parking and / or travel to and from the airport, etc.
The provision of receipts for cash purchases are not as widespread in some countries as in UK. Take a small notebook and note down every cash purchase you make....or use an expenses app.
The ability to make purchases on debit and credit cards are not always available (even if they are, there are a remarkable amount of strangely 'broken' card machines in many shops and restaurants. Make sure you have cash on you.
HTH
I have seen both.
Most recent role was day rate plus expenses when away from normal company office and I had to comply with client's in house expenses policy / system. I was working through my own Ltd Co. and there were at least two agencies in the contracting chain.
Another was day rate including all expenses. You take a view on how much travel there is likely to be and what it is going to cost when agreeing the rate. They would not drop the rate £50/day and move to expenses excluded which gave me a view on how much the expenses were likely to be.
Be wary of quoting on one basis (5* hotel and using something else deliberately (budget hotel), many government based contracts have audit provisions in them to make sure charges are fair and reasonable and this would be seen as a breach. As a buyer I would see it as dishonest and, if there were no other powers, your contract would not be renewed.
Most recent role was day rate plus expenses when away from normal company office and I had to comply with client's in house expenses policy / system. I was working through my own Ltd Co. and there were at least two agencies in the contracting chain.
Another was day rate including all expenses. You take a view on how much travel there is likely to be and what it is going to cost when agreeing the rate. They would not drop the rate £50/day and move to expenses excluded which gave me a view on how much the expenses were likely to be.
Be wary of quoting on one basis (5* hotel and using something else deliberately (budget hotel), many government based contracts have audit provisions in them to make sure charges are fair and reasonable and this would be seen as a breach. As a buyer I would see it as dishonest and, if there were no other powers, your contract would not be renewed.
Eric Mc said:
You are now running a business - you are NOT an employee.
As a consequence, you bill your client for the work you do at a sufficient amount to cover all your costs and overheads - that is how businesses make profits.
As a business, you should not really "claim expenses" (like an employee would) but rather charge out your time at a sufficiently high enough rate to cover your costs.
Are you registered for VAT?
Eric might be good at accountancy, but he knows bugger all about being a consultant.As a consequence, you bill your client for the work you do at a sufficient amount to cover all your costs and overheads - that is how businesses make profits.
As a business, you should not really "claim expenses" (like an employee would) but rather charge out your time at a sufficiently high enough rate to cover your costs.
Are you registered for VAT?
Every consultancy in the universe, from one-man bands to vast multinationals, charges expenses and charges a lot of them. Whether you're charging a day rate, a piece rate, or fixed price - there will be expenses on top without exception. For sure, if you are asked to travel away from the place you would usually deliver the service then I would expect to be able to charge expenses.
On the specific question about travel, it is however unusual to charge for travelling days. You need to speak to the client directly but on the whole you travel in your own time. There might be slightly more room for negotiation if for example you normally deliver training 5 days a week, and in this instance they want 3 days plus two travelling days, but even this would typically only work if you actually needed two travelling days (ie you were going to Singapore or something. A quick hop over to Paris isn't going to cut it).
Countdown said:
Some companies are strange. They expect contractors to be limited by their own in-house T&S policies and so want to see expenses itemised separately.
Indeed they are - and I would argue against them if they insisted on "employee type" expense claims. I have even seen them ask for contractors to provide them with original receipts for "expenses". In the modern world where the spectre of IR35 looms large, both the hirer and the hiree should do everything in their power to distance themselves from any practices that shout out "this chap is really an employee - stuff him for IR35".
deckster said:
Eric might be good at accountancy, but he knows bugger all about being a consultant.
Every consultancy in the universe, from one-man bands to vast multinationals, charges expenses and charges a lot of them. Whether you're charging a day rate, a piece rate, or fixed price - there will be expenses on top without exception. For sure, if you are asked to travel away from the place you would usually deliver the service then I would expect to be able to charge expenses.
It's not the case for us. We employ numerous Consultants - some will charge us an all-inclusive rate, some will charge expenses separately, and for some we will pay the travel/accommodation expenses on their behalf.Every consultancy in the universe, from one-man bands to vast multinationals, charges expenses and charges a lot of them. Whether you're charging a day rate, a piece rate, or fixed price - there will be expenses on top without exception. For sure, if you are asked to travel away from the place you would usually deliver the service then I would expect to be able to charge expenses.
IME the smart consultants will include the expenses costs within their day-rate. It means they can travel using the cheapest method and make a profit.
deckster said:
Eric might be good at accountancy, but he knows bugger all about being a consultant.
Every consultancy in the universe, from one-man bands to vast multinationals, charges expenses and charges a lot of them. Whether you're charging a day rate, a piece rate, or fixed price - there will be expenses on top without exception. For sure, if you are asked to travel away from the place you would usually deliver the service then I would expect to be able to charge expenses.
On the specific question about travel, it is however unusual to charge for travelling days. You need to speak to the client directly but on the whole you travel in your own time. There might be slightly more room for negotiation if for example you normally deliver training 5 days a week, and in this instance they want 3 days plus two travelling days, but even this would typically only work if you actually needed two travelling days (ie you were going to Singapore or something. A quick hop over to Paris isn't going to cut it).
I am not saying that a contractor shouldn't recover their expenses. It's more they should go about it. If the organisation is insisting that you "reclaim expenses" in the manner of an employee, you are really being rather stupid in that you are waving a massive "IR35 Flag" at HMRC.Every consultancy in the universe, from one-man bands to vast multinationals, charges expenses and charges a lot of them. Whether you're charging a day rate, a piece rate, or fixed price - there will be expenses on top without exception. For sure, if you are asked to travel away from the place you would usually deliver the service then I would expect to be able to charge expenses.
On the specific question about travel, it is however unusual to charge for travelling days. You need to speak to the client directly but on the whole you travel in your own time. There might be slightly more room for negotiation if for example you normally deliver training 5 days a week, and in this instance they want 3 days plus two travelling days, but even this would typically only work if you actually needed two travelling days (ie you were going to Singapore or something. A quick hop over to Paris isn't going to cut it).
Another area where the "claiming of expenses" can cause massive confusion is the VAT treatment.
And, contrary to what you say about knowing "bugger all" about contracting - I have looked after dozens of contractor clients over 30 years and can safely say that by following my advice not one has EVER had an IR35 issue.
I had a client for whom I travelled. I invoiced the actual cost of flights, hotels and meals (with receipts) for trips to Europe. When I travelled to USA, they usually arranged the flights and hotel for me. If not, I recharged at cost. Premium Economy or Business for flights over 3 hours.
In terms of my time, if I travelled on a weekend, they got that for nowt, because there was no opportunity cost. If I travelled during the week, then I charged for a full day, on the basis that I'd be working a bit too.
That's the arrangement I had with them, and it worked for me. My rate was for4 hours, or part thereof.
In terms of my time, if I travelled on a weekend, they got that for nowt, because there was no opportunity cost. If I travelled during the week, then I charged for a full day, on the basis that I'd be working a bit too.
That's the arrangement I had with them, and it worked for me. My rate was for4 hours, or part thereof.
Simon-R said:
I am fairly new into the world of Freelance work. I am due to do some work which involves overseas travel and I was wondering how it normally works.
E.g. when working in the UK I am paid a day rate for delivering training for a client, the same client wants me to deliver the same training but oversea. What can I charge for days that I am travelling? Do I charge for total number of days away from home x day rate. e.g. 2 days travelling and 3 days training = 5 chargeable days?
I hope the above makes sense.
Short haul we don't charge, eg Europe.E.g. when working in the UK I am paid a day rate for delivering training for a client, the same client wants me to deliver the same training but oversea. What can I charge for days that I am travelling? Do I charge for total number of days away from home x day rate. e.g. 2 days travelling and 3 days training = 5 chargeable days?
I hope the above makes sense.
Long haul, flight time > 4hrs (our rule), customer has a choice.
Pay for Business Class airfare or Travel time and Premium Economy airfare.
One customer has no problem with Business Class, others (which have no Business Class travel policies internally) happily pay the travel time.
Our travel time is "door to door", so for example whilst working in New Hampshire the customer was charged 12 hrs travel each way - at normal charge rate.
Also worth having a policy of "Direct flights only" whenever possible.
Eric Mc said:
How did you handle the VAT on the "recharges"?
Did you hand over original "expense receipts" to the organisation you were working for?
I used copies of the original receipts to backup my invoice, and I'd have to check, but I don't think I charged VAT because of the place of supply.Did you hand over original "expense receipts" to the organisation you were working for?
ETA: The hotels and meals were all outside UK, so will have inclued MwST or TVA, but I'd have passed that on, as I didn't reclaim any of it.
Edited by Doofus on Wednesday 27th June 09:11
Eric Mc said:
If the organisation is insisting that you "reclaim expenses" in the manner of an employee, you are really being rather stupid in that you are waving a massive "IR35 Flag" at HMRC.
That is a rather broad generalisation.What about the scenario where they themselves invoice the end customer for expenses? Having the contractor use the company's timesheet/expenses system is entirely appropriate and has nothing to do with IR35.
Doofus said:
I used copies of the original receipts to backup my invoice, and I'd have to check, but I don't think I charged VAT because of the place of supply.
ETA: The hotels and meals were all outside UK, so will have inclued MwST or TVA, but I'd have passed that on, as I didn't reclaim any of it.
All sounds fine. I have no real issue if the "hirer" is happy to be supplied with copies of expense invoices (even if it a bit of a pain for the contractor to have to provide them). However, it gets really contentious is they ask for original expense invoices. There are a number of legal and tax issues arising if they go down that route.ETA: The hotels and meals were all outside UK, so will have inclued MwST or TVA, but I'd have passed that on, as I didn't reclaim any of it.
Edited by Doofus on Wednesday 27th June 09:11
i) the contractor is obliged by law to keep proper records of their business transactions. These usually consist of original invoices and receipts. Handing over these original documents to a third party is not a good idea if you ever want to prove the validity of a business expense at a later date
ii) VAT rules require you to retain original receipts and invoices
iii) IR35 raises its ugly head if a hirer is asking its contractors to supply them with original expense receipts as that is a practice normally associated with how they deal with expenses paid to employees.
Obviously, with the move to "e-billing" and other electronic forms of invoicing, what constitutes an "original" document and what constitutes a "copy" is not as clear cut as it once was.
x5x3 said:
Eric Mc said:
If the organisation is insisting that you "reclaim expenses" in the manner of an employee, you are really being rather stupid in that you are waving a massive "IR35 Flag" at HMRC.
That is a rather broad generalisation.What about the scenario where they themselves invoice the end customer for expenses? Having the contractor use the company's timesheet/expenses system is entirely appropriate and has nothing to do with IR35.
Eric Mc said:
x5x3 said:
Eric Mc said:
If the organisation is insisting that you "reclaim expenses" in the manner of an employee, you are really being rather stupid in that you are waving a massive "IR35 Flag" at HMRC.
That is a rather broad generalisation.What about the scenario where they themselves invoice the end customer for expenses? Having the contractor use the company's timesheet/expenses system is entirely appropriate and has nothing to do with IR35.
Contractor B (a ltd co) is contracted to work on project X for one of Company A's clients (lets call them C).
Company A agrees to charge Company C expenses for travel and hotels.
Company A also agrees that Contractor B can invoice them expenses.
Contractor B ensures there is a substitution clause (the main one but there are others) in the contract with Company A.
There are no IR35 issues whatsoever in this scenario.
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