Re-chargeable expenses

[sgtbilko]

Sorry, this is a fairly long one but I'd be very grateful for any advice on how to deal with the re-chargeable expenses paid to my ltd company by my agency

Example:
I spend £500 on expenses in a week out of my own pocket (not the ltd company bank account). I keep the original receipts.

I charge the client (an agency) this and they pay me the £500 back which goes via bacs into the ltd company bank account.

My question is, what is the correct way of getting the £500 back out of the Ltd company and into my pocket without either myself or the ltd company paying tax on it?

If I use the company debit card for larger expenses like hotels, I'm concerned that when re-imbursed by the client the money will sit in the ltd company bank account and will attract tax in one form or the other eventually.

Thanks

[malvolio]

There's this magic new thing now, called an "Expense Form". Fill one in and submit it to your comapny, and the company will pay you the money...

Seriously, as long as you have the receipts and the audit trail in the form of an expense claim (doesn't have to be fancy) you can reimburse expenses directly. No tax to you (normally, beware of BIK but shouldn't apply to staying away living costs) and comes off your company corporation tax.

But why not pay it from the company in the first place, via a debit card. It's cost neutral and saves a lot of hassle - as you have just proven.

[sgtbilko]

aha! not as tricky as I thought, thanks for that.

another quick one, the agency allows me 25p per mile mileage claim. So, obviously, as part of my re-chargeable expenses I get £25 per 100 miles from them. Can I re-imburse myself 40p per mile on the expense claim I put into my ltd company?

[JonnoWeb]

My understanding is yes you can, as that is the designated IR rate.

The client is not payinf 25p per mil to you, it is paying it to your Ltd Co.

The arangement between your Ltd Co (not you) has with the client should not affect the arrangement between yourself and your Ltd Co.

[sgtbilko]

thanks, that's what I thought

[ASB]

aha! not as tricky as I thought, thanks for that.

another quick one, the agency allows me 25p per mile mileage claim. So, obviously, as part of my re-chargeable expenses I get £25 per 100 miles from them. Can I re-imburse myself 40p per mile on the expense claim I put into my ltd company?

You are probably better off NOT claiming mileage from your comapany (especially if you are a 40% taxpayer).

You are allowed to claim the difference between 40p/25p and what you were actually reimbursed via your tax return.

If you don't claim then your profit will be increased by this amount and the CT will go up accordingly (broadly @ 19%).

However you personally can then get relief at your highest marginal tax rate which will normally more than outweight the CT suffered.

Talk to you accountant about it, it may be appropriate for your cxircumstance, or it may not.

[sgtbilko]

thanks for all advice