Contractor Ltd Company, Only 5% expense?

[johnywalker]

Hi,

I am contracting using my own Ltd company and my contracts come inside IR35. So, do I only get 5% as tax free expense? What if I want a training related to work which costs 2-3K? Can't my company pay for it?

Johny.

[NotAllThere]

You can deduct travel and subsistence. All other expenses - training courses, accountancy fees etc. come out of the 5% of the remaining. It's all about being fair, you see.

[BrilloPad]

Hi,

I am contracting using my own Ltd company and my contracts come inside IR35. So, do I only get 5% as tax free expense? What if I want a training related to work which costs 2-3K? Can't my company pay for it?

Johny.

That is if HMRC catch you

Have you joined the PCG?

[johnywalker]

You can deduct travel and subsistence. All other expenses - training courses, accountancy fees etc. come out of the 5% of the remaining. It's all about being fair, you see.

When you say travel, can I take car mileage if I travel to work in car and ticket money if I travel by tube?

And when we take 95% salary, how will we pay Employer NI? Or is it calculated along with the 95%. Normal calculations on a total will only deduct employer NI and paye tax. please clarify

Thanks,
JOhny.

[johnywalker]

That is if HMRC catch you

Have you joined the PCG?

No. I don't have any insurance now. ANd I guess they wouldn't provide insurance cover if your work comes inside IR35, would they?

Thanks,
JOhny.

[malvolio]

Hi,

I am contracting using my own Ltd company and my contracts come inside IR35. So, do I only get 5% as tax free expense? What if I want a training related to work which costs 2-3K? Can't my company pay for it?

Johny.

Nope, one of the great injustices of IR35. The 5% covers what HMG thinks as being all the cost of running a standalone business.

However, strictly speaking you also can't claim training if it is not directly related to the job you are doing - say a coder who takes a Prince2 course. But if it is directly concerned with the job you are doing and you're IR35 caught, there's no reason why your client shouldn't pay for it, (which is HMG's assumption about what is supposed to happen, since your client is your employer)...

[johnywalker]

Nope, one of the great injustices of IR35. The 5% covers what HMG thinks as being all the cost of running a standalone business.

However, strictly speaking you also can't claim training if it is not directly related to the job you are doing - say a coder who takes a Prince2 course. But if it is directly concerned with the job you are doing and you're IR35 caught, there's no reason why your client shouldn't pay for it, (which is HMG's assumption about what is supposed to happen, since your client is your employer)...

I take your point Mal, but when is it that a company pays contractor to go for a course??? The training was definitely job related so that I could go further in my specialization and get mote money in the next contract. Can't we justify it?

And, if we can only take 5% as expense and then pay taxes and NIs on 95% of the salary with no company benefits (like perms), what is the point in contracting? Am I missing something like Flat Scheme VAT (which will generate 1-2K in an annum)??

Thanks,
Johny.

[expat]

Hi,

I am contracting using my own Ltd company and my contracts come inside IR35. So, do I only get 5% as tax free expense? What if I want a training related to work which costs 2-3K? Can't my company pay for it?

Johny.

No. The Government's view is that "if training is needed for the job then the employer should pay for it".

[malvolio]

No. The Government's view is that "if training is needed for the job then the employer should pay for it".

WIS...

[johnywalker]

You can deduct travel and subsistence. All other expenses - training courses, accountancy fees etc. come out of the 5% of the remaining. It's all about being fair, you see.

When you say travel, can I take car mileage if I travel to work in car and ticket money if I travel by tube?

And when we take 95% salary, how will we pay Employer NI? Or is it calculated along with the 95%. Normal calculations on a total will only deduct employer NI and paye tax. please clarify

Thanks,
JOhny.