Chargeable and Non Chargeable Expenses

[Rivendell]

Can anyone help a newcomer (well, I should say potential contractor!) understand the difference here?

I've been touted for a potential contract that will involve travel (75 miles per day) and a Severn Bridge toll (5.50pd). Now this will cost a fair whack - (approx £15 fuel and £5.50 per day x 20 = £410 per month).

My understanding is that some expenses are chargeable to the client and some are not. I guess this is typically down to the specific contract terms?

As a general rule however, am I right in understanding that these costs are not fully re-claimable ( and that this is a common misconception by non-contractors). Rather, they are deducted from your profits and, as such, you don't pay tax on them?

So, how much could, or should I be reclaiming back from my contractor company monthly if I went down the LTD co route?

Thanks for your understanding in advance (I don't have an accountant to ask these Qs yet)!

[craig1]

Can anyone help a newcomer (well, I should say potential contractor!) understand the difference here?

I've been touted for a potential contract that will involve travel (75 miles per day) and a Severn Bridge toll (5.50pd). Now this will cost a fair whack - (approx £15 fuel and £5.50 per day x 20 = £410 per month).

My understanding is that some expenses are chargeable to the client and some are not. I guess this is typically down to the specific contract terms?

As a general rule however, am I right in understanding that these costs are not fully re-claimable ( and that this is a common misconception by non-contractors). Rather, they are deducted from your profits and, as such, you don't pay tax on them?

So, how much could, or should I be reclaiming back from my contractor company monthly if I went down the LTD co route?

Thanks for your understanding in advance (I don't have an accountant to ask these Qs yet)!

General rule is to check your contract. It's a rare contract that will cover commuting expenses to one set place but it's not unheard of if you negotiate hard enough.

Assuming you work through your own company here rather than umbrella (or similar): On reclaiming money, you bill your company an expense claim for the mileage and travel expenses incurred. Best done at these rates to keep on the good side of HMRC. In general though, it's 40p per mile for the first 10,000 miles in a tax year then 25p after that. These costs come straight off your P&L ledger and reduce your end of year profit (and tax). If you're there for over two years (or know that it'll go over two years) then you have other issues and generally can't claim, search the forum this specific point has been covered to death.

Keep a detailed daily mileage log. Start mileage and end mileage of all business journeys. HMRC will want to see this if they choose to audit you. Don't just bodge it once a month with guesses, HMRC are good at detecting that sort of thing. One bit that most contractors I know fail to do is also charge the company for mileage for interviews, client meetings, agent meetings or any journeys undertaken for business reasons. Also, don't try to con the system with dodgy mileage claims, it's just not worth it.

[Sockpuppet]

There are two things here.

a) Are they chargeable to the client. That will depend on your contract and what you have agreed with the client.


b) Are they reclaimable as a expense (by you from your Ltd).

Yes, they are. So you'll be claiming £0.40 x 75 (upto 10,000 miles, 25p thereafter) and £5.50 per day. You'll save on this the ~21% you would have paid corp tax on. So £85 a month tax saving.


If they don't agree to pay expenses just stick them into your daily rate.

[thunderlizard]

Accounting details aside, for a daily commute I wouldn't charge the client travel expenses separately. I'd just make sure the daily rate was set appropriately to cover it.

[AnthonyQuinn]

If they don't agree to pay expenses just stick them into your daily rate.

How do you STICK something into your rate? The rate would have been pre-agreed??

[badger7579]

How do you STICK something into your rate? The rate would have been pre-agreed??

i.e you negotiate a higher rate to cover expenses....

[Scrag Meister]

Can anyone help a newcomer (well, I should say potential contractor!) understand the difference here?

I've been touted for a potential contract that will involve travel (75 miles per day) and a Severn Bridge toll (5.50pd). Now this will cost a fair whack - (approx £15 fuel and £5.50 per day x 20 = £410 per month).

My understanding is that some expenses are chargeable to the client and some are not. I guess this is typically down to the specific contract terms?

As a general rule however, am I right in understanding that these costs are not fully re-claimable ( and that this is a common misconception by non-contractors). Rather, they are deducted from your profits and, as such, you don't pay tax on them?

So, how much could, or should I be reclaiming back from my contractor company monthly if I went down the LTD co route?

Thanks for your understanding in advance (I don't have an accountant to ask these Qs yet)!

Monthly toll TAG, £96.80.

Severn Crossing Toll Prices