Reimbursed expenses

**malvolio** · 11 April 2008, 23:03

Originally posted by thermalp4 View Post

Hi.

I've got a question about reimbursed expenses which I hope someone can kindly help me with

.

I've contracting for 3 years, about 18months LTD company and have currently changed contracts where now all my expenses are reimbursed.

My current payment structure is Salary/dividends and expenses etc which my accountant has worked out for me.

Am i right in saying that i could now just draw salary and dividends every month with no expenses and use my company card to pay for all the re-imbursed expenses?

I'm currently on £230/day 5 days a week. Expenses will amount to roughly 500a week but reimbursed fully.

Could someone please illustrate what the company structure would be?

Many thanks.

Confused.

If you're confused about this, perhaps you need a new accountant? Gross income is what YourCo charges its clients, salary is what you want it to be, dividends are paid out of post-CT profits, expenses are pre-CT costs, personal expenses are revenue neutral. VAT has to be accounted for at some point in that loop as well. If you don't understand some or all of that, you haven't done your homework.

If, by expenses, you mean YourCo pays £100 a week for accomodation and that is repaid fully by your client then you have just added £100 to YourCo's gross income and taken £100 of your CT liabliity. If, however, you personally lay out £100 and claim it from your client, it has no effect at all on YourCo (but is a bad idea for IR35 and taxation generally). If you pay it personally, reclaim it from YourCo and YourCo charges the client, again it is neutral in income terms, offsets against CT, but there is a VAT element to consider. Simple, isn't it...

Basically, your mistake is treating expenses as income. They aren't.

Reimbursed expenses