limited company / IR35 etc

[dmini]

I've spent a couple of hours trying to get my head around this & failed, so asking the question here instead
I have limited company, if contract is inside IR35 I believed I could claim 5% allowable expenses, + other expenses (mileage etc) then rest as pay, as I understand it. Does the 5% cover things like accountant costs, bookkeeping costs etc, or do they come out of the big picture first? I was assuming they did, but then I got scared, and started to look around, and understood even less at the end!
If accountant costs do come out first, what sum is the 5% taken as part of?
Dumb questions I know, but I need to know, and my brain hurts now!

[malvolio]

Simple answer - take your gross income for the contract (you can do this quarterly, monthly or annually BTW). Deduct allowable expenses - that 's basically travel and accommodation, accountant's fees and necessary purchases like PCs (but not training and similar). From that balance take off 5%. What's left (i.e. 95% of gross less working expenses) is your deemed salary and the sum of money you pay PAYE and NI (Employer's and employee's) on. Send off a big cheque to Hector with the payslip from the yellow book. Weep and rend your garments at the waste of money. Start again next period.

And I have to say it, are you sure you're inside IR35? 99.8% of those challenged by Accountax and the like have passed to date...


Also, if you have accountant's fees, I assume you have an accountant. Tried asking them? Else just why are you paying them anyway?

[The Lone Gunman]

Simple answer - take your gross income for the contract (you can do this quarterly, monthly or annually BTW). Deduct allowable expenses - that 's basically travel and accommodation, accountant's fees and necessary purchases like PCs (but not training and similar). From that balance take off 5%. What's left (i.e. 95% of gross less working expenses) is your deemed salary and the sum of money you pay PAYE and NI (Employer's and employee's) on. Send off a big cheque to Hector with the payslip from the yellow book. Weep and rend your garments at the waste of money. Start again next period.

And I have to say it, are you sure you're inside IR35? 99.8% of those challenged by Accountax and the like have passed to date...


Also, if you have accountant's fees, I assume you have an accountant. Tried asking them? Else just why are you paying them anyway?

Surely you calculate the 5% of the gross before deducting expenses?

[simondolan]

Surely you calculate the 5% of the gross before deducting expenses?

Correct - 5% is allowed on the turnover figure.

I certainly would get the contract reviewed though just to make sure - mail me a copy over if you like:

simonatsjdaccountancy.com

[malvolio]

Hmm... So now you know hy my previous accountant is my previous accountant.

[dmini]

Thanks
Simon, I will take you up on that, when I get sight of the contract. I am just looking at worst case, as it stands. Anything else is a bonus then!

Why can't you claim training? Because you are director or what?

Debbie

[malvolio]

You can claim training but you can't offset it from your IR35 liabililty. Just one of the little iniquities in the IR35 rulebook. It's also one of the major complaints against IR35 outside the tax issue itself - you can't keep up in IT if you don't do training, so why is it not a business expense?

[expat]

You can claim training but you can't offset it from your IR35 liabililty. Just one of the little iniquities in the IR35 rulebook. It's also one of the major complaints against IR35 outside the tax issue itself - you can't keep up in IT if you don't do training, so why is it not a business expense?

The answer has been clearly stated by HMG: "If training is required for the job, the employer should provide it". Client doesn't want to train you for the next contract? That's your fault for having the wrong status: "if you have the correct status (i.e. employment) then the appropriate benefits will flow from that".

In other words, become an employee or else!

[ASB]

You can claim training but you can't offset it from your IR35 liabililty. Just one of the little iniquities in the IR35 rulebook. It's also one of the major complaints against IR35 outside the tax issue itself - you can't keep up in IT if you don't do training, so why is it not a business expense?

Surely it's not *quite* that bad. If the training is required for a specific contract then it should surely be claimable?

If one started in a VB role say and then got shuffled to a C# project then that would be claimable I think.

[dmini]

OK guys - esp for the accountants around here.
Checking out Simon's spreadsheet - the free download one, if you are within IR35, accountants fees are not a deductible expense - correct? Neither is postage etc.
Is this correct? I see various lists out there, many of which seem to allow postage, accountants fees etc, and comments earlier on this thread saying they were claimable, but I cannot find them as allowable on the HMRC site. I am also assuming that setup costs cannot be claimed back - ie company formation.

Also - one for Simon - how do I feed charitable giving - either from payroll or direct from the company into your spreadsheet. Both are allowable as far as I can see under IR35.