Expenses NOT dispensations.

[pechnatunk]

I apologise in advance for this Noob question but believe me I have sifted through the boards and all I've found is that I'm more confused about expenses and that maybe I shouldn't have quit my job...

Don't start on dispensations - that's one thing I do(think) understand - I'm after some hard yet digestible HMRC facts on basic expenses that in my situation really shouldn't differ whether I'm LTD or brolly.
I live in London and will have different and very short contracts - 1-2 days, no more than a week here and there - probably repeat clients but sporadic.

On average - jobs will be 4-7 miles from my house - with a minimum commute and work day being 10 hours round trip.
Now, can I claim travel from home (which may or may not be classed as a workplace) to a job (which AFAIK, under an umbrella co is an 'alternative' workplace) and back.
Also can I claim for lunch and a coffee or two? And does HMRC have a 'sensible' figure for the cost of lunch for myself.
I've read the everybody has to eat threads, just wondering what is possible given the above definitions - workplace/Home, workplace/client and workplace/umbrella's address.
I'm also confused with the 5hrs=meal stuff I've read - though feel free to cut me down if that has come from a D-word thread.
And just in case - I know it is very important to keep ALL receipts - hence the title.

Thanks, Vic

[northernladuk]

How long have you been working in London. You are aware of the 24 month rule? If you have been working in London for over 24 months you can't claim for some of this anyway. It's in the right hand menu links...

You want to claim for coffee??? Come on......
Lunch is a couple of quid? Do you really spend this and remember all you are saving is the tax on it. Hardly worth it really but what do you do for lunch? Go home, get sandwich, onsite canteen?

[SueEllen]

The reason you are confused is because it's not black and white, and relies on doing what can be interpreted as reasonable.

In your case you can claim travel to a specific location for 24 months.

Looking at the HMRC guide on employee expenses they use the City of London as an example. So if in your case all your clients are in a few miles of each other then after 24 months you should stop claiming.

This is because if HMRC ever inspected your records they would argue that another client within the 7 mile radius isn't far away enough to be another temporary location.

However if you do get one or more clients who end up being further from your house then you should claim travel expenses to those clients.

Some people like me just try and ensure their clients are in different places from one contract to the next so this isn't a problem. Though it does help my contracts are longer.

With regards to meals umbrella companies operate differently to limited companies so you need to ask the company you use what their rules are on claiming for meals.

Follow their rules in claiming and only claim for what you have receipts for.

[pechnatunk]

Thanks,
The 24 month rule is no issue as I've just started my first freelance post today and my tier 5 visa runs out in March - which is a whole other debacle I need to think about.

You want to claim for coffee??? Come on......
Lunch is a couple of quid? Do you really spend this and remember all you are saving is the tax on it.

haha - there's not much else I can claim for - don't get me wrong - I'm not going to claim for the sake of it, but that's why I'm asking - I don't want to think about it if I do get lunch. Call me crazy/lazy - but when I was permanent, some days I could spend over 10 quid on lunch, coffee and a snack.
But you're right - what I should be worrying about is packed lunches and umbrella fees - this week for example I'll gross 280 pounds... If only I could roll timesheets over til I get 5 days worth.

If these are the only tax benefits I foresee receiving - do you think a PAYE option is better than Umbrella?

[northernladuk]

It might be your first freelance job but how long have you been working in London prior to freelancing?

I thought you had to be employed by a licensed sponsor for a tier5 visa?

[stek]

It might be your first freelance job but how long have you been working in London prior to freelancing?

I thought you had to be employed by a licensed sponsor for a tier5 visa?

Who left the coffin lid open?

[stek]

It might be your first freelance job but how long have you been working in London prior to freelancing?

I thought you had to be employed by a licensed sponsor for a tier5 visa?

Tier 5 is the old Working Holiday Maker Visa - basically for a bit of paid holiday time, not a path to ILR of citizenship, OP will have to think again if thats the agenda - no sponsor is needed for T5 btw...

[stek]

WRT T5:

Can you extend your stay or switch into another immigration category?
While you are in the UK under the youth mobility scheme, you cannot switch into any other category of the points-based system or into a visitor route. When your visa expires at the end of the 24 months, you cannot extend your stay.

Can you settle here at the end of your stay?
You cannot apply for permission to settle in the UK (also known as 'indefinite leave to remain') from Tier 5, and time spent in any tier 5 category will not count towards any application for settlement that you make in the future.

[Wanderer]

Now, can I claim travel from home (which may or may not be classed as a workplace) to a job (which AFAIK, under an umbrella co is an 'alternative' workplace) and back. Also can I claim for lunch and a coffee or two? And does HMRC have a 'sensible' figure for the cost of lunch for myself.

Your "workplace" would be your home office and travel to other sites would most likely be allowable against tax (I see you understand the 24 month rule). So, claim the cost of the travel card or mileage rate if you drive or ride.

Under an umbrella you can claim a flat amount for meals as per their dispensation. As a LTD company you won't have a dispensation so you only claim the actual amount you can prove you spent.

I've read the everybody has to eat threads

The statement that "everybody has to eat" is a little misleading.

What typically happens for contractors like yourself is that you will travel to a client site, you can't eat the food you have at home so you are forced to go and buy something and this is allowable -regardless of the fact that you had to eat anyway. The reasoning is that this was an additional expense incurred because of your legitimate business travel to a client site. However, if you made a packed lunch at home from things you brought in your weekly shop then this is NOT allowable.

Also remember that things you put on your company expenses reduce your company profits. So if you put £100 on expenses then the net cost to you personally is still about £80 so don't go thinking that everything that goes on expenses is "free" (unless the client is paying, in which case, fill your boots!).

I presume you are trading as a LTD company then? I can't imagine an umbrella would work properly with lots of very short contracts and with such short engagements, you will be outside IR35 so LTD is a tax efficient way to trade though you will want a good accountant on board from day 1.