Per Diem as an expense?

[genius]

So what is a reasonable daily expense to allow myself when determining profits for the year?

I invoice it on a separate line each month.

[Louisa@AardvarkAccounting]

So what is a reasonable daily expense to allow myself when determining profits for the year?

I assume we are still talking about subsistence... There are no restrictions in regards to the amount for subsistence, just as long as you incur this whilst on a qualifying business journey.

In your case, I imagine this will likely be whilst you are working a temporary location (assuming you don't fall foul of the 24 month rule/caught by IR35). HMRC did publish rates for benchmark scale rates:

Breakfast rate - £5 (can claim if leaves the house unusually early and before 6am)
One meal (5 hour) rate - £5
Two meal (10 hour) rate - £10
Late evening meal rate - £15 (can claim if working unusually late and after 8pm)

However again, assuming you are a 'one man band', it will be easier for you to claim the receipted amounts (new rules came in from April 2016 about benchmark scale rates). But anything around these levels, HMRC would seem to deem this as 'reasonable'.

Other guidance will be given if you are working away from home, perhaps on an overseas trip about what you can claim.

HTH

[genius]

I'm working in the EU (outside UK) so I am in staying in a hotel. Every day I am on site I invoice the £40 per diem.

So I assume I can do breakfast + late meal so £20 / day.

[northernladuk]

So what is a reasonable daily expense to allow myself when determining profits for the year?

I invoice it on a separate line each month.

Surely that's up to you to make an estimate on how you are going to manage yourself. Lobster dinner everyday or tuna sandwich from the supermarket?

And why are you trying to determine profit? Just the feel.good factor to see how rich you are of for some divi planning exercise?

[CoolCat]

Big companies can agree a per diem rate with HMRC, per location, as an agreed per day rate for employees staying away at one location.

The thing is the HMRC would want something like 3 months receipted living to establish what realistic prices were. So the staff sent out first were obliged to collect receipts for everything, and (encouraged by the company) spend as much as they reasonably could, so that the bills were fairly high and this would enable a higher per diem rate to be agreed with the revenue. Seen it done for all costs hotels, meals, etc. (the higher the untaxed "per diem" the less taxed "overseas allowance" they would have to pay to get people to work there)

Of course as soon as the HMRC formally agreed the per diem rate everyone on site would instantly move into cheaper digs and start pocketing the difference. That's the way it works, and is part of the perks of staying away (especially abroad) long term.

I am sure such companies just pay their contractors the same per diem rate as their perm staff get, makes it easier on the admin. But of course you own limited wont have established the deal with HMRC, so you need to receipt everything you claim tax free.

I suppose you could talk to HMRC and talk about establishing an agreed per diem rate if you are going to be somewhere a long time, not sure how much admin is involved in setting this up though.

There used to be a mechanism for getting legit expenses (like gardening) of your home address pad tax free, if you were going to be abroad long term, as you wouldn't be there and able to do it. Don't remember the details.

[genius]

Surely that's up to you to make an estimate on how you are going to manage yourself. Lobster dinner everyday or tuna sandwich from the supermarket?

And why are you trying to determine profit? Just the feel.good factor to see how rich you are of for some divi planning exercise?

So i know what my corp tax is going to be?

[TheCyclingProgrammer]

I'm working in the EU (outside UK) so I am in staying in a hotel. Every day I am on site I invoice the £40 per diem.

So I assume I can do breakfast + late meal so £20 / day.

IIRC you need to have a dispensation to use scale rates so you might want to check that.

Just keep receipts for any meals incurred whilst working on-site including an evening meal if you stay overnight and claim those.

Assuming the £40/day your client lets you bill them for is just to cover expenses in addition to your hotel costs, then all you need to know is that as long as your actual costs incurred and claimed back from YourCo are less than £40/day, you will be making a net profit on the per diem rate.

[northernladuk]

So i know what my corp tax is going to be?

Well its your business but many times I've seen people doing this it's so they can divi everything out and the Corp tax can be paid by the last few months of income which is obviously extremely risky and wrong.

Get yourself Freeagent and it's all there in front of you. Do a few months see how much is owing and then x12 to get a pretty close estimate.

Just asking as the first question didn't inspire much confidence.

[genius]

I havent kept a single receipt all year so I'm ****ed.

Doesnt really matter I guess.. I had about 4k I was going to declare as expenses but I'll just forget it.

[northernladuk]

I havent kept a single receipt all year so I'm ****ed.

Doesnt really matter I guess.. I had about 4k I was going to declare as expenses but I'll just forget it.

Wow... just wow...

But dunno why I'm surprised. I miss the days we could suggest people were sockie trolls.