Managing expenses efficiently

[youngguy]

The only way to get around it is (a) pay all expenses from YourCo - i.e. not personally and reclaiming it - [

But if you go over 2tlyrs you can't claim it as an expense,so it has to be paid personally does it not?

[GreenMirror]

But if you go over 2tlyrs you can't claim it as an expense,so it has to be paid personally does it not?

You can claim as an expenses. But must declare it as a BIK. So why bother claiming it?

Of course real contractors will work from at least 3 places. So 24 month rule does not apply.

[youngguy]

Of course real contractors will work from at least 3 places. So 24 month rule does not apply.

Haha riiiiiiiiight

[northernladuk]

But if you go over 2tlyrs you can't claim it as an expense,so it has to be paid personally does it not?

It's paid personally 24 months or not anyway.

[malvolio]

I thought the question was about how to recover the losses incurred by exceeding 24 months and losing the BIK exemption. And the answer is you can't, even if you can pass the extra cost up to the client, you're still liable for it personally, and if you simply up your personal take-home to cover the extra cost you still have to pay taxes on it.

OK, quick answer; exceed the 24 month limitation and you can't claim tax relief on expenses. YourCo can pick up the bill ( in fact should, rather than faff around with expense claims), and you may be able to re-charge that to your client, but I doubt they will pay it. Even so, you will have to pay the BIK values in taxes.

What you do with your personal income or your client charges is up to you.


HTH.

[youngguy]

.. if you simply up your personal take-home to cover the extra cost you still have to pay taxes on it.

HTH.

Yes that was my point. So let's say right now I spend my £46k basic rate income on all manner of things but not T&S (that's a company expense).

If I go over two years I now have £40k to spend on those things at £6k goes on travel expenses I can no longer claim.

Increasing day rate by £27.27 gives the company an extra £6k pa....however if that was withdrawn you'd lose over £3,000 to taxes (personal and div).

So in order to still have that £46k, you end up having to withdraw ~£56k (assuming I have modeled correctly).

Therefore you might be seeking an extra £10k income,which which be a day rate increase of £45.

NB those figures are not exact!

And I know many will say the client may not pay , but my view would be that if they wanted me to stay there is an increase cost to my business therefore my rate is now £45 more. Much like my rates for a local job are much cheaper than a job 500miles away as I would always factor in costs etc.

[fatJock]

Surely the answers are:

1. Suck it up.
2. Try and get a rate increase to offset the impact.
3. Move on to something else.

You’ve suckled on the expenses teat for 24 months and surely should have considered this eventuality?

[youngguy]

Surely the answers are:

1. Suck it up.
2. Try and get a rate increase to offset the impact.
3. Move on to something else.

You’ve suckled on the expenses teat for 24 months and surely should have considered this eventuality?

They are exactly the options. My Q was whether anyone had modeled the impact for option 2.

I'm actually not anywhere near 24months, hence the consideration now.

[fatJock]

They are exactly the options. My Q was whether anyone had modeled the impact for option 2.

Go ask the client and let us know how you get on.

It’s basic maths to model....you don’t want to be out of pocket but can no longer claim expenses if and when you get to 24 months and fall within the limitations of the rule.

Possibly best to see if you make it until then before postulating ....

[youngguy]

Go ask the client and let us know how you get on.

It’s basic maths to model....you don’t want to be out of pocket but can no longer claim expenses if and when you get to 24 months.

Possibly best to see if you make it until then .....

I get that you don't know and that's ok! No shame is admitting it (as I have done).

I've modelled it, was just seeing if others had and if there was anything I had missed.

Clearly from the answers here no one has.

As I've said before, I'm not on here to argue, I am here to learn, so enjoyable as your ill founded assumptions are, I shall not bite.

Have a stress free evening, I'm sending you hugs!