Reply to: Govt. looking to remove travel expenses for contractors.

[vwdan]

Guys just lighten up!

In February 1987 I was working on site in Grangemouth and the staff guys working for the electrical contracting company had worked away from home for years.

As from April 6 that year anyone of those staff guys working away from home for over two years lost the tax fee status on expenses. The phoned their mates working with other contrcators and got the same story from them.

There was no change of site ability to statrt again.

It is exactly the same for staff people now and in certain cases their employers pay the tax on travel expences for them but their salary is lower.

Those who think that HMRC hate LTD company people are just feeling sorry for themselves.

Give me one good reason why the guy along the road from me pays his own expences after tax as I did for years working staff to go into Aberdeen about an hour away but for the last two years up to October 2014 I have claimed £0.45 per mile tax free to make a similar journey.

Get a life and NO you are not a special case just because you are a Limited Company, you can always go back staff if these guys are getting a better deal than .

Maybe because some of us actually follow the spirit of the law as well as the letter, rather than being glorified 'fill a seat' permies. In the last 12 months I've had 7 or 8 workplaces and I claim the same expenses as I did when I was a permie doing the same work for a consultancy.

[TheFaQQer]

Give me one good reason why the guy along the road from me pays his own expences after tax as I did for years working staff to go into Aberdeen about an hour away but for the last two years up to October 2014 I have claimed £0.45 per mile tax free to make a similar journey.

Because he chose to work there as a permanent location, and you chose to work there as a temporary location. At the end of three months, he is likely to still be working there, and you could be at the other end of the country and having to travel or relocate there.

If you want a flexible workforce, then you shouldn't be making it fiscally impossible to have one. And whatever the rules are, why should they be different for a one man Ltd and for Crapita?

[drumtochty]

Guys just lighten up!

In February 1987 I was working on site in Grangemouth and the staff guys working for the electrical contracting company had worked away from home for years.

As from April 6 that year anyone of those staff guys working away from home for over two years lost the tax fee status on expenses. The phoned their mates working with other contrcators and got the same story from them.

There was no change of site ability to statrt again.

It is exactly the same for staff people now and in certain cases their employers pay the tax on travel expences for them but their salary is lower.

Those who think that HMRC hate LTD company people are just feeling sorry for themselves.

Give me one good reason why the guy along the road from me pays his own expences after tax as I did for years working staff to go into Aberdeen about an hour away but for the last two years up to October 2014 I have claimed £0.45 per mile tax free to make a similar journey.

Get a life and NO you are not a special case just because you are a Limited Company, you can always go back staff if these guys are getting a better deal than you.

[Pondlife]

Never gonna happen - how on earth are HMRC going to differentiate between PSC's and Limited Companies without legally defining PSC's first? They've already tried and failed once. If HMRC aren't careful they'll end up making changes that will affect all Ltd's meaning that big businesses will be affected too - and they definitely won't accept this without a fight.

You've not heard of the shiny new Freelance Limited Company (FLC) that's just around the corner.

http://forums.contractoruk.com/gener...y-ask-any.html

[Gordon Ice]

Ineptitude rules..

Never gonna happen - how on earth are HMRC going to differentiate between PSC's and Limited Companies without legally defining PSC's first? They've already tried and failed once. If HMRC aren't careful they'll end up making changes that will affect all Ltd's meaning that big businesses will be affected too - and they definitely won't accept this without a fight.

[LisaContractorUmbrella]

The major problem is that my normal quoted rate for London at £500 per day includes a built in amount of £150 for travel expenses. It doesn't matter where you live as an IT consultant there never seems to be a project on your doorstep. If travel expenses become taxable then working away from home in the UK would not become viable. Tax and NI on £150 @ 40% rate would leave me about £80 a day out of pocket.

And that needs to be explained to HMRC - as a specialist you will go where the work is

[Brussels Slumdog]

The major problem is that my normal quoted rate for London at £500 per day includes a built in amount of £150 for travel expenses. It doesn't matter where you live as an IT consultant there never seems to be a project on your doorstep. If travel expenses become taxable then working away from home in the UK would not become viable. Tax and NI on £150 @ 40% rate would leave me about £80 a day out of pocket.

[LisaContractorUmbrella]

They're HMRC, they'll do what they want, consultation or not.

The aim is to increase the tax take, reduce tax relief and force as many people into 'employment' as they can. Just how the last bit fits with their political masters 'flexible workforce,' I do not know.

It doesn't which is why I personally don't think anything drastic will happen. Much of the problem has been caused by pressure from the Unions who feel that workers who are employed by an umbrella company are 'exploited' but, the fact of the matter is, that many workers have been forced down the brolly route who shouldn't have been and that is now having an impact on the whole industry. If the Government can be made to see that there is a big difference between a low paid worker who is taken from permanent employment or self employment and moved to an umbrella with no uplift in pay and a highly skilled independent contractor who chooses to work with an umbrella rather than operating through a Ltd Co then the problem will resolve itself without drastic action by our friends at HMRC. Form filling is a pain the the backside I know but the more contractors that respond to this the better chance we have of establishing a separation between temps and contractors and that will give the industry a lot more stability moving forward

[BolshieBastard]

They're HMRC, they'll do what they want, consultation or not.

The aim is to increase the tax take, reduce tax relief and force as many people into 'employment' as they can. Just how the last bit fits with their political masters 'flexible workforce,' I do not know.

[LisaContractorUmbrella]

<ducks> This is a discussion document and not a consultation document which means that HMRC haven't made any decisions one way or another - it is worthwhile putting in your two penn'th. Political pressure has meant that contractors have been lumped in with low paid temps and the distinction needs to be pointed out by as many people as possible. It's also worth noting that the definition of a temporary workplace would have to be looked at before anything could be done as the concept of an overarching contract is established in employment law

[eek]

From a quick glance at the document.

1) HMRC still don't understand that if you refer to something as a PSC they really need to create a legal definition of it.
2) its nice to see that they have realised that doing something has consequences (its only taken them 700 years to realise that and this is the very first example of it that I can remember).

The thing is that they are again doing this the wrong way round. They need to look at employment law and prohibit the scummy bottom of the market agencies who endeavour to pay the low skilled as little as possible. Attacking how expenses are used is not the correct approach. Requiring those agencies to use timesheets including travel time, enforce payment of least minimum wage and provide them with zero dispensation for expenses would be a far better approach.

[7specialgems]

Govt. looking to remove travel expenses *relief* for contractors.

FTFY

Will be frustrating if this goes through but I can see the logic in it.

MAR is often abused as an equity relief device.

Taking it away forces extraction through salary or dividends. To keep the net extraction at the same level will attract fresh tax.

Hector is probably also anticipating market rates to rise in response, which will increase the VAT haul and inflate the CTAX income further than the 20% extra it will already attract through being not-allowable.

The government aren't outlawing expense payments outright (lol at that idea) so I think the IPSE are going to have a fight on their hands with this one.

[vwdan]

It's only the tax on those expenses you'd lose, you're still paying them out. I'm having an extension/24 months role issue at the moment, but the actual loss to me if I did fall foul is only £11 a day in my circumstances, obviously better in my pocket but not as bad as one might think.

I did some calcs and I'm looking at about £16 a day (Or closer to £20 if I don't get to claim VAT back, too). Still, that's £400 pcm though which adds up! I was expecting worse, though.

[DaveB]

They are just discussing this - nothing has been decided, so continue are you are.

They are suggesting you make your views known though.

If you act for contractors working through PSCs you can make your views known by emailing HMRC on [email protected], or comment below.

[stek]

They really do hate us, don't they!

I doubt contracting would be financially viable for me if I couldn't claim tax relief on expenses. I'd have to go back to being permie, where I'd promptly claim exactly the same kind of expenses and my new employer (Who is magically shielded from this, I guess) could claim tax relief on them instead.

It's only the tax on those expenses you'd lose, you're still paying them out. I'm having an extension/24 months role issue at the moment, but the actual loss to me if I did fall foul is only £11 a day in my circumstances, obviously better in my pocket but not as bad as one might think.