expenses

[lfc69]

Doing contract via MyCo and paying myself a salary upto the personal tax limit so no tax to pay and then putting in a claim to MyCo for travelling everyday @ 40p per mile (but actually stopping in a hotel during the week).

MyCo invoice the client for the correct hotel / mileage costs with the correct VAT rate etc.

Am I okay to do this as no tax to pay at all or am I storing up a lot of trouble for the future ?

[malvolio]

Hmmm, dodgy, IMHO

It depends really on the difference between mileage charged and actual hotel bills: if it is significant - say more than a few percent - then you are guilty of tax evasion, which is a criminal offence.

Stick to the rules and claim what you spend. It's a lot safer and ultimately cheaper.

[lfc69]

... so how to get money out of the company ?

... there is quite a difference but I would have thought that as MyCo is invoicing correctly, and that I do not attempt to get tax relief on it via Self Assesment then it is an internal issue between MyCo and me.

If not then how can I get money out of the company as before I started people said dividends, but since I started everyone has said don't take dividends every week / month as this alerts the great and good people at IR.

[planetit]

Director’s loan.

Incidentally, the IR have no way of knowing that you are paying monthly dividends.

[malvolio]

Don't quite follow your logic. You are claiming mileage you are not driving in order to take money out of the company without paying tax on it, either as YourCo's Corporation Tax or as your PAYE. And your mitigation is that you are paying some of it back by another, nominally more legal route. So that makes it al lright that you are claiming both for overnight accomodation and daily travel simultaneously

Beep! Reality check needed. That's illegal. You'll go blind if you don't stop.

[lfc69]

maybe other ways then...

Lets say I have got this wrong and stopped immediately what about either of the follwoing options...

Employee Benefit Trusts or Renting out my home office to MyCo at the market rate

Are these problematical ?

[G8_Summit]

for goodness sake - just take dividends like everyone else. You could pay daily divis for anyone cares. As long as the tax man gets his corp tax at the end of the year he will not be interested at all.

Employee benefit trusts...I ask you.

[Darren@UptonAccountants]

Eb

Employee Benefit Trusts

There is a formula to work out the use of house type charge, but there are likely to be many other expenses that you haven't put through your company as yet.

Once you've posted through a salary and expenses, you're left with drawing as a dividend....the trick is to maximise the expenses. On another point, if you're drawing out the bare minimum salary, the IR will deem you an easy target and will put a high risk rating on the company.

[Rebecca Loos]

Or you could get yourself some serious mollah and go for an offshore EBT. Risky but not illegal (yet - people on this board often confuse the 2 )

IR35, divis... I ask you! Whatever next - pay your council tax in full?

[xoggoth]

I beieve there is now a concessionary oh so generous £10 a week you can claim on home as office with no Qs asked. Else you can claim heat and light only and need to justify. If you want to get more you need to have a proper rental agreement drawn up, perfectly legal AFAIK.