IR35 Again

[tonibat]

Can someone please advise if Training and Home office expenses (rent etc) can be expensed in an IR35 Ltd co. and what the 5% admin costs is supposed to cover.

Also if we paid a salary out of the company for bookeeping and admin to a spouse is this allowed under S660 and is it precluded because of the 5%?

[centurian]

Can someone please advise if Training and Home office expenses (rent etc) can be expensed in an IR35 Ltd co. and what the 5% admin costs is supposed to cover.

Also if we paid a salary out of the company for bookeeping and admin to a spouse is this allowed under S660 and is it precluded because of the 5%?

All this is "AFAIK"...

What can be taken straight off the top are what are known as "Section 198" expenses. These are

Travel and subsistence (subject to 40%/24 month rule)
Pension payments made by company
Professional Indemnity insurance - not sure about Public Liability.
Benefits in kind (but you get taxed on them anyway)

Taken from the Contractor UK site http://www.contractoruk.com/ir35/what_is.html. Note it said training expenses are not included.



Everything else has to come out of the 5%. If you don't spend 5%, then the company makes a profit, which you can take as a dividend. If you're spending more than 5%, the company is running at a loss.

Some literature says you "don't need to account for the 5%". That means you don't need to prove that you needed 5%. You still need to account for any business costs if you want them paid before tax - otherwise you'll be taxed at 40% (assuming higher rate) on the 5%.

[tonibat]

Thanks.

However the good news is we have the contract looked at and it is outside IR35!

Phew.

Bound to be more other questions now about outside IR35!

thanks for you help