Are client contributions towards travel expenses taxable?

[TheCyclingProgrammer]

However, the "actual expenses incurred" depends on whether YourCo has a dispensation in place, for which benchmark scale rates may apply.

True, I was trying to keep it simple. Generally, I'd imagine most small LtdCos won't have a dispensation and if they do its probably a reporting dispensation rather than for scale rates. But even if you're using HMRC scale rates, you aren't bound by them in what you charge the client so there may still be a difference.

[VectraMan]

This makes no sense.

You're still getting the CT relief on the expenses YourCo reimburses to you.

Yes, this is only cancelling out the CT liability on the extra income from the rebilled expenses but the fact that you've been able to re-bill them means neither you OR YourCo is out of pocket. You are clearly better off from re-billing.

I didn't say YourCo would be out of pocket. Just that you're paying more CT to the tune of 20% of the reimbursed expenses. Makes perfect sense.

The question is what's the difference between your daily fee, and the money you charge your client to cover expenses? And the answer is: nothing. It makes no difference what you say it's for; it's all part of the sale. So yes contributions towards travel expenses are taxable.

[Contreras]

Don't mention the VAT. I mentioned it once but I think I got away with it.

[VectraMan]

Don't mention the VAT. I mentioned it once but I think I got away with it.

I'm just pleased nobody's tried to make this about IR35. Yet.

[jamesbrown]

True, I was trying to keep it simple. Generally, I'd imagine most small LtdCos won't have a dispensation and if they do its probably a reporting dispensation rather than for scale rates. But even if you're using HMRC scale rates, you aren't bound by them in what you charge the client so there may still be a difference.

Yes, they are completely separate. You bill the client according to the contract (for any outrageous amount you can get away with )

As NLUK mentioned, the dispensations are getting more difficult to obtain now. Glad I got mine when they were rarely queried.

[Grizzlyjunk]

We need more input.

Does your company invoice the client for their contribution or is it paid directly to you personally? The answer makes a heap of difference to how it must be treated by you, your company and how the tax office will see it.

Good point. My company invoices the client for their contribution.

Many thanks,

Matt

[Grizzlyjunk]

Got it. Thanks for everyone's help.

Gotta go adjust my accounts now...