About to plunge into having my own ltd co. - questions

[pipo]

Hi all,

Please be gentle... I'm very much a newbie in all of this. I'm about to start contracting and have decided to opt for my own ltd company as opposed to an umbrella.

My questions is on expenses. For my new job i will be reimbursed by the employer a certain amount on several things when i'm on site (for example, parking costs, toll fees, 10p per mile on mileage, £5 on lunch [round sum paid regardless of whether i paid £1.30 or £9.00], and so on).

Now technically, it will be my company (say Pipo Ltd) that will be claiming this from the employer (say Big Corp Ltd), so Pipo Ltd will be reimbursed those amounts as agreed with Big Corp Ltd. This is when it starts getting hazy for me: Can these amounts be claimed by Pipo Ltd as part of its business expenses? Presumably it is the Inland Revenue that this claim is made out to? And how do the lunch claims work, since these are fixed at £5 each time? (i think i know the answer to this, but i just need confirmation)

Also how do I claim, as (essentially) an employee of Pipo Ltd, the 40p per mile that is worth to me?

Hope this is all making sense. Thank you all in advance.

[FarmerPalmer]

Pipo Ltd invoice Client Co for amounts as agreed with client co.
This is Pip Ltd's income.

You as employee submit expense claim to Pipo Ltd, based on inland revenue guidelines, and Pipo Ltd pay you these amounts.
This is Pipo Ltd expenses.

Any difference in these amounts in either profit or loss for Pipo Ltd

[Paddy]

Hi all,

Please be gentle... I'm very much a newbie in all of this. I'm about to start contracting and have decided to opt for my own ltd company as opposed to an umbrella.

My questions is on expenses. For my new job i will be reimbursed by the employer a certain amount on several things when i'm on site (for example, parking costs, toll fees, 10p per mile on mileage, £5 on lunch [round sum paid regardless of whether i paid £1.30 or £9.00], and so on).

Now technically, it will be my company (say Pipo Ltd) that will be claiming this from the employer (say Big Corp Ltd), so Pipo Ltd will be reimbursed those amounts as agreed with Big Corp Ltd. This is when it starts getting hazy for me: Can these amounts be claimed by Pipo Ltd as part of its business expenses? Presumably it is the Inland Revenue that this claim is made out to? And how do the lunch claims work, since these are fixed at £5 each time? (i think i know the answer to this, but i just need confirmation)

Also how do I claim, as (essentially) an employee of Pipo Ltd, the 40p per mile that is worth to me?

Hope this is all making sense. Thank you all in advance.

1. You do not have an employer when you have your own limited company.
2. All money coming in to your company is revenue.
3. You can only claim for what you actually spend.

[northernladuk]

Hi all,

Please be gentle... I'm very much a newbie in all of this.

Happy to be gentle as long as you bothered to search the forums and put a bit of effort in. If not then it's open season on the noob!

The stuff you can claim back from the client you put in as part of your invoice and then claim it as an outgoing in your tax. That way it won't be considered as profitiable revenue.

The other stuff like the 40p you claim as an outgoing against your tax and just pay yourself that amount at the end of you pay period (or use a company credit card when filling up etc)

<section deleted as it was incorrect as pointed out below>

[pipo]

Thanks for the comments/advice - i think it's slowly making some sense.

Cheers!

[Paddy]

Becareful NOT to double claim the mileage though tempting as it maybe. It's fraud. If you are claiming 10p a mile from your office (home) to the client then you can't claim 40p off your tax as well as you have already been paid for it.

I believe you are wrong or I could be misunderstanding the situation.

If client pays 10p per mile for example 100 miles that is £10. That £10 is paid to the limited company an HMCR will treat that as income. The Limited Co. (or the contractor) will then claim 40p per mile (£40) back in tax. Don’t forget this is not a payment from HMCR; it is your money all you are doing is working hard to get £30 plus £10 expenses and not paying tax on it. 10p or even 40p per mile will not cover the costs of running your car for a mile; your client is getting cheap transport.

Accounts in way aforementioned way does not amount to double claiming. In a similar way my Barrister charges his client (me) £5 per mile, this for part of his income bit he can only claim 40p per mile back in tax. The remaining £3.60 is taxable. This is way I have dealt with mileage and how all other contractor I know deal with it.

[northernladuk]

Yes, I hang my head in shame. You are right in that explaination.

[VectraMan]

Becareful NOT to double claim the mileage though tempting as it maybe. It's fraud. If you are claiming 10p a mile from your office (home) to the client then you can't claim 40p off your tax as well as you have already been paid for it.

That bit confused me too.

Most of us get 0p from the client for mileage to the client's site, but personally claim 40p per mile from our Ltd. You could claim 10p per mile from your Ltd., and claim back the tax on the other 30p with your tax return, which perhaps is what Northernladuk meant, but that'd be stupid as you're in control of your Ltd's expenses policy.

Basically what goes on between you and your Ltd. is nothing whatsoever to do with what goes on between your Ltd. and client.

[framework]

Heres the way i do this, with no problems so far.

1. Invoice clientco for days worked (weekly)
2. Send in expense claim for expenses which Myco has paid upfront (weekly)

This expense claim includes expenses at 40p per mile and any hotels and meals incurred that week.

3. Clientco then pays total of above amount into Myco account

4. Myco then pays me out 40p per mile for the mileage incurred

I don't see any problem doing things that way as you are only claiming once.
As the previous poster said, the arrangement between Myco and the client is totally separate from the arrangement between Myco and Me.

[pipo]

Thank you all for your help.