Subsistence Allowance question

[irishcontractor]

Surprised no one has mentioned he should in fact be paying the tax in the country he is working not UK tax


Sent from my iPhone using Contractor UK Forum

I don't work in the same place every rotation, one 6 week rotation could be Greece, the next Italy the next Spain and even then it can change half way through and I end up in another country.

As its only 6 weeks at a time as far as I was aware I don't spend enough time there to pay tax in those countries and also as I live in the UK when i'm off so HMRC consider's me resident for tax purposes, also as I invoice through my UK LLC I have to pay UK Corp Tax.

That is my understanding, please correct me if I am wrong. Cheers

[Old Greg]

OK. OK. I'll take that on the chin.

I should have read your link.
I should not have assumed that my outdated understanding was still correct.
I should not post answers when drunk.

Hang on a minute.

[TheCyclingProgrammer]

I don't work in the same place every rotation, one 6 week rotation could be Greece, the next Italy the next Spain and even then it can change half way through and I end up in another country.

As its only 6 weeks at a time as far as I was aware I don't spend enough time there to pay tax in those countries and also as I live in the UK when i'm off so HMRC consider's me resident for tax purposes, also as I invoice through my UK LLC I have to pay UK Corp Tax.

That is my understanding, please correct me if I am wrong. Cheers

Where you are tax resident only impacts where you pay tax on your wordwide earnings. You can be potentially liable to pay income tax on earnings from day one in some countries. You may want to get professional advice.

[irishcontractor]

Where you are tax resident only impacts where you pay tax on your wordwide earnings. You can be potentially liable to pay income tax on earnings from day one in some countries. You may want to get professional advice.

Ohh right, ok I'll look into that. cheers

[WordIsBond]

EIM30295 - Employment Income Manual - HMRC internal manual - GOV.UK
It states that you can pay both subsistence and incidental overnight expenses.

More on incidental overnight expenses:
exempt from tax and NIC: NIM06015 - National Insurance Manual - HMRC internal manual - GOV.UK
amount: EIM02730 - Employment Income Manual - HMRC internal manual - GOV.UK

Subsistence / scale rates:
EIM05250 - Employment Income Manual - HMRC internal manual - GOV.UK
Expenses rates for employees travelling outside the UK - GOV.UK

In short, you can personally pay your expenses and then have your company pay you the scale rates and also the overnight incidentals per diem (£5 in UK, £10 for nights overseas) tax free, no matter what you spent.

The scale rates do not include travel -- air fare, travel from airport to hotel. I always pay these with my company card but if you pay with your personal card you should have your company reimburse the actual amount. They do not include client entertainment (if you take a client to dinner, for instance), they would only include your dinner. They do include hotel to client office taxi fare.

You are only supposed to claim scale rate for things for which you actually incurred an expense. If a client takes you to dinner, you cannot claim the scale rate for that meal. If your brother lives there and you stay with him instead of in a hotel, you aren't supposed to claim scale rate for lodging. If you choose to walk 1/2 mile to your client's office instead of taking a taxi, technically you are not supposed to claim scale rate for that because you incurred no expense. If it was raining and you didn't bring a brolly and you decided to buy one just for the walk and then discard it, arguably that's a cost of getting to the client office in lieu of taxi and you could claim scale rate. It's an argument you might lose if HMRC ever checked. Your actual expense can be far below the scale rate and that's fine but if you actually don't spend anything you aren't supposed to claim. How HMRC ever knows, I don't know, but it's not enough savings to make it worth looking in my mirror and seeing a tax cheat. I only claim when I've had an actual expense.

If your actual expenses exceed scale rates, you can have the company pay them and not use the scale rates. In general, the scale rates are reasonably generous and I've never had a trip where actual expenses exceeded them.