Travel & subsistence under IR35

**pr1** · 9 December 2016, 07:51

Originally posted by Consett26 View Post

I'm about to start a new assignment and fear IR35 might apply so I want to get a feel for how much I'll take home and whether its worth taking it. However, as I haven't had to consider IR35 under the new rules I'm a little unclear as to how to treat travel and subsistence. Is the calculation Income - 5% to give deemed payment, apply PAYE (& employers NI?) to the deemed payment to give a net payment, then subtract expenses from the net to give what I'll actually take home?

I suspect that it is but if so that's pretty horrific. Out of a gross payment of around £1500 pw I'd take home a grand total of £240.56 (which is equivalent to an annual salary of £13,740)

IR35 rules haven't changed, from April 2017 if you are working in the public sector the 5% for expenses will be removed but as of today, it's unchanged (everywhere)

**Consett26** · 9 December 2016, 08:03

I thought from April 2016 travel & subsistence were no longer subject to tax relief and therefore had to come out of whatever was left after tax & NI have been deducted from the deemed income

**eek** · 9 December 2016, 08:06

Originally posted by Consett26 View Post

I'm about to start a new assignment and fear IR35 might apply so I want to get a feel for how much I'll take home and whether its worth taking it. However, as I haven't had to consider IR35 under the new rules I'm a little unclear as to how to treat travel and subsistence. Is the calculation Income - 5% to give deemed payment, apply PAYE (& employers NI?) to the deemed payment to give a net payment, then subtract expenses from the net to give what I'll actually take home?

I suspect that it is but if so that's pretty horrific. Out of a gross payment of around £1500 pw I'd take home a grand total of £240.56 (which is equivalent to an annual salary of £13,740)

That sounds correct - if inside IR35 travel and subsistence cannot be claimed for the part of your travel any permanent member of staff would make (that came in on April 5th 2016). So travelling to your clientco and staying near clientco can't be expensed and would have to be paid out of your taxed income.

Basically you have to look at a inside IR35 contract as if it was a permanent role - with expenses no longer an option a lot of work is just not going to be practical..

**pr1** · 9 December 2016, 08:14

Originally posted by Consett26 View Post

I thought from April 2016 travel & subsistence were no longer subject to tax relief and therefore had to come out of whatever was left after tax & NI have been deducted from the deemed income

Good point! (thought you were talking about the soon-to-be-changes in Apr2017) so take T&S out of whatever the calculator spits out net

**Consett26** · 9 December 2016, 08:52

Originally posted by eek View Post

That sounds correct - if inside IR35 travel and subsistence cannot be claimed for the part of your travel any permanent member of staff would make (that came in on April 5th 2016). So travelling to your clientco and staying near clientco can't be expensed and would have to be paid out of your taxed income.

Basically you have to look at a inside IR35 contract as if it was a permanent role - with expenses no longer an option a lot of work is just not going to be practical..

Perhaps I see a way out with the bit I've highlighted above: The situation is that my company is contracted (via an agency) to a consultancy and I'm currently working from home on an internal project for the consultancy (and IR35 doesn't apply). I'm shortly going to be working on a new project for a client of the consultancy. The end client doesn't want people working remotely, whether at the consultancy's office or from home, so I might have to work at the clients offices. If so, its likely that IR35 will apply because I'll probably be working under the direction and control of the pm and/or team lead (both consultancy employees). The permies on the same project, all of whom are employees of the consultancy, get travel, hotel, and meals paid for by the consultancy under its expenses scheme. Under these circumstances can I claim the tax relief on my expenses, even if IR35 caught?

(I think I'm perhaps getting confused by comparing the expense situation with client employees rather than consultancy employees. If I was contracted directly to the end client any expenses would definitely come out of net pay)

**amanwhoisquiet** · 9 December 2016, 09:10

Originally posted by Consett26 View Post

its likely that IR35 will apply because I'll probably be working under the direction and control of the pm and/or team lead

I don't reckon that's a given. It you become some super-pedant then there's no work in the world that's completely free of direction and control, and just because you're onsite it doesn't mean that you're being directed and controlled. They just might want to make sure the work is secured. If they start timing your toilet breaks then it's a rethink.

**Consett26** · 9 December 2016, 09:13

Originally posted by amanwhoisquiet View Post

I don't reckon that's a given. It you become some super-pedant then there's no work in the world that's completely free of direction and control, and just because you're onsite it doesn't mean that you're being directed and controlled. They just might want to make sure the work is secured. If they start timing your toilet breaks then it's a rethink.

Oh ok. That's food for thought, thanks

**malvolio** · 9 December 2016, 09:43

You can claim any expenses you like as a matter of company policy. What you can't do, if inside IR35, is claim tax relief on them (other than for exceptional ones incurred as a result of a journey to somewhere that is not your normal workplace).

The usual suggestion is to up your rate to compensate but, as any sensible contractor will know, that's not a realistic option.

**MrMarkyMark** · 9 December 2016, 10:06

Originally posted by malvolio View Post

You can claim any expenses you like as a matter of company policy. What you can't do, if inside IR35, is claim tax relief on them (other than for exceptional ones incurred as a result of a journey to somewhere that is not your normal workplace).

The usual suggestion is to up your rate to compensate but, as any sensible contractor will know, that's not a realistic option.

In the main, I would agree with you, however, for some roles market forces will be fully in play.
If a client really wants someone, they can and will pay all expenses on top of your usual day rate.

A client really wanted the other half on, a fairly remote site recently for a 6 month contract, she said she would only agree if all expenses were on top and they agreed.

Travel & subsistence under IR35