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Off site expenses (not home to temporary workplace)

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    Off site expenses (not home to temporary workplace)

    Morning all,

    Just after some advice to check I am not going mad. I work through a compliant Umbrella company, current client co. wants to send me from my base location (Halifax) all over the country for meetings, usually about once a week to either London, Bristol or Belfast. To date it has always been London or Bristol, so I can book a pre-paid train ticket using their travel supplier and there are no problems. Now Belfast trips are expected, which means flights and hotels which cannot be booked by the client pre-paid – I instead have to pay and claim back, again no problem as I have done this many times over my 15 years as a contractor. The client signs my expenses claim off, then the umbrella company raises an invoice which the agency pays.

    Problem is… the umbrella company think that these expenses payments are taxable. They are lumping it all togethor with my taxable income, as I am well into the higher rate tax bracket I’m being charged higher rate tax for these expenses. I have challenged this repeatedly and am being told that unless I can prove lack of SDC, the expenses are taxable. I think there are getting confused between normal commuting expenses (which were banned unless no SDC is provable in 2016) and off-site travel, which is still permitted (I think).

    Having reviewed the 2016 legislation I think I am right that off-site travel paid for by the client is not taxable, see example given by HMRC below:

    ““Example 2
    As in example 1, Jim is employed under an overarching contract of employment by the umbrella company under arrangements when he would be an employee of the client if engaged directly.
    During the 3 months Jim is working in Crawley at X Ltd’s warehouse he is asked to spend 3 days working at X Ltd’s other warehouse in Shoreham.
    He isn’t entitled to relief for travel and subsistence in respect of travel to and from Crawley, but is entitled to a deduction under ITEPA section 338 for his travel and subsistence costs to Shoreham, as this is travel to a temporary workplace and is not a new engagement. There’s also a disregard for NICs purposes for his travel and subsistence costs to go to Shoreham.”

    Since moving to Umbrella I don’t keep as much of an eagle eye on the boards as I used to so I am not up to speed with the latest tax goings on. Is my understanding of this still correct? If it is and in the event that the Umbrella won’t back down from their interpretation do I have any way to force the issue? Would prefer not to move Umbrella right now due to pension and re-mortgage issues this may case.

    Cheers!

    #2
    Correct you seem to be incurring out of pocket expenses which are not taxable.

    You could claim them directly from the company/client I believe - there is no need to even include them on a tax return as it is literally the company giving you back the money you shelled out to get the flight/hotel.

    It could be the umbrella are not being told these are non taxable however I would have thought you would have entered this somewhere on their timesheet/contract system and so they know to expect £x amount for your salary and y amount for your expenses.

    Just double check the taxable amount on your payslip - are you 100% sure the expenses are being taxed?

    Comment


      #3
      Yes, you are right. These shouldnt be included in your taxable pay.

      Either ask them to pay you directly for these costs or look at an umbrella company which will allow this. Plently do. Give some a qucik call.

      Comment


        #4
        Hi Ketto, it depends on what is deemed as your workplace or your base for the assignment, if you are based the majority of the time in Halifax then they are chargeables which would not be taxable unless the journey is deemed a "regular commute" in which case they could argue the case that this is becoming a permanent place of work by HMRC's definition.

        ‘Ordinary commuting’ is defined as being journeys between your home (or somewhere that is not your workplace) and a ‘permanent workplace’. ‘Permanent workplace’ in this situation is defined as being a workplace which you attend regularly and which is not a ‘temporary workplace’. There are several rules in place to determine whether or not your workplace qualifies as a temporary workplace;

        • whether you are attending the workplace location for a limited duration (i.e. a temporary purpose)
        • whether you perform, or expect to perform, your duties to a significant extent at the workplace location (in other words, whether over 40% of your working time is spent at a given location)
        • whether you attend, or expect to attend, the workplace location for more than 2 years.

        As for SDC that is irrelevant if they are chargeables.

        Comment


          #5
          Thanks guys. Yes they are definitely being taxed as income. Going to complain formally to the Umbrella but have a feeling it will fall on deaf ears. If so i’ll switch. Thanks for your help.

          Comment


            #6
            Thanks Lucy, i’m usually WFH x1 day a week and x3 days in Halifax, with Halifax the contractual base. The away trips so far have been one day a week to London, Bristol or Belfast. Likely that Belfast will be 2-3 days per month going forward as that is what the project demands.

            I think by using the SDC argument it is clear that they just don’t understand the rules. Which is frustrating as in their line of work they really should.

            Comment

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