Reply to: Accommodation & other expenses when staying away

[Graham]

Sounds like it'd be worth having a try for a dispensation then, although I expect things to be fairly straightforward so might not make overly much difference in the end.

I've confirmed with the landlady now that I will transfer the money straight to her account from my company account so that's that one sorted Good to know about use of cash though for future.

Thanks for all the replies.

[darrylmg]

No, employee travel expenses have to be reported on a P11D regardless of who pays for it unless a dispensation is in place.

Paying for an employees travel is considered a business expense from YourCo's perspective and hence is tax deductible for corporation tax.

From an employees point of view, travel expenses are potentially a BIK which is why they are reported. It's down to the employee to claim tax relief for valid business travel on their tax return.

Ok. Thanks for the explanation.

[TheCyclingProgrammer]

Easiest way to avoid the P11D and the associated self assessment double entry bollocks and inevitable tax code adjustment from HMRC is to apply for a reporting dispensation. It takes 5 minutes and the worst that can happen is it doesn't get approved.

Mine came through in a week.

[Contreras]

Ok, I'm not sure on this bit...
If you pay for travel accomodation directly from the company account, why does it go on your p11d?
Isn't it just a normal business expense?

Because 'they' say so.

Employee travel - A tax and NICs guide for employers :

It applies to all employers who pay travel expenses whether:

• by reimbursing employees’ business travel costs
• by paying directly for business travel on behalf of employees, or
• by providing travel facilities for employees.

So, source of payment does not determine if an expense should be declared on P11D.

There is no tax to pay. It's a pointless exercise really, except I suppose HMRC want to be aware "just in case".

NW made a good post here.

Since it's a zero sum game, it is sometimes reasoned that travel expenses paid direct by the company do not need to be declared. If you take that view then by the same reasoning you might as well not bother declaring reimbursed expenses either. Personally I think any advice to "short-circuit" the P11D should always be qualified in that it is not what the rules say (whether HMRC actually care is another matter).

[TheCyclingProgrammer]

Ok, I'm not sure on this bit...
If you pay for travel accomodation directly from the company account, why does it go on your p11d?
Isn't it just a normal business expense?

No, employee travel expenses have to be reported on a P11D regardless of who pays for it unless a dispensation is in place.

Paying for an employees travel is considered a business expense from YourCo's perspective and hence is tax deductible for corporation tax.

From an employees point of view, travel expenses are potentially a BIK which is why they are reported. It's down to the employee to claim tax relief for valid business travel on their tax return.

[darrylmg]

It doesn't make much difference whether you pay for the accommodation directly from the business bank account or pay personally and expense it (i.e. reimburse yourself). It needs to be reported on your P11d in either case and you need to hold on to the receipt.

Ok, I'm not sure on this bit...
If you pay for travel accomodation directly from the company account, why does it go on your p11d?
Isn't it just a normal business expense?

[Contreras]

Was in a similar position once so I paid a cheque from the company account (payable to me) into my personal account and then withdrew the cash from the personal account to pay to the house owner. The cheque from the company account gave the traceability and matched the receipt.

Whilst that would be acceptable I don't see how it helps vs. withdrawing cash direct from the company account. Also gives HMRC an excuse to ask for bank statements on your personal account.

[Sausage Surprise]

Question(s)...
1 - Is it ok to withdraw cash from my business account to pay the rent? (I've never withdrawn cash from the account before so sorry if it seems like a silly question!)

Was in a similar position once so I paid a cheque from the company account (payable to me) into my personal account and then withdrew the cash from the personal account to pay to the house owner. The cheque from the company account gave the traceability and matched the receipt.

[Graham]

Thanks everyone for your answers.

In answer to the question about usually residing at my parents whilst in contract, except for while I was renting a house yes I was. However that was my first contract and it lasted just short of 3yrs, so this one that I will be living away for is actually only my 2nd contract and will be the first time I live away from home for a contract.

Yeah so basically the big question is if HMRC will accept that my parents is my permanent residence as if they won't then it throws the rest out. I think its fairly easy for me to prove it is because all my belongings are here, my cat is here, company is registered to here, my bank accounts, cars, insurances etc etc, its just whether they get upset because I'm not paying anything to live here as their wording seems to imply you have to be paying something for it to be considered your permanent residence.

I'm not paying them anything at the moment, I could begin paying them under the rent a room scheme that's a good idea.
Although so far the only reason I've not been paying them anything is that I moved back in to save money (spending £1200 a month + bills renting a house wasn't really leaving me any capability to save some money to buy a house) and to buy a house as quickly as possible which isn't proving to be possible very quickly.

**Moany bit about house prices**...
I would already be living in my own house if prices hadn't gone up 30% in a year I was renting a house from July 2013 to July 2014 and hoping to buy it at the end of the tenancy, when I began renting it was valued around £275k, then by the end of the tenancy it was being valued at £340-360k which put it well out of my price range
I've got a budget of £250k to buy somewhere and am really struggling to find anything bigger than a shoebox around here hence still living with my parents rather than in my own house.

[LisaContractorUmbrella]

The OP was renting, but has changed their permanent base at the moment, while they are looking for somewhere else. If it was me, I'd claim it, and be prepared to argue the case if it ever came up - they are living somewhere else, their possessions stay somewhere else, and the proposed rental for the contract doesn't cover a full week, which implies to me that they have somewhere else that they normally reside.

If he owned or rented somewhere else at the moment, then there wouldn't be an argument over whether that house is temporary or not. The easiest way to make it clear might be to pay his parents rent under the rent a room scheme, so they don't pay any extra tax on it, and he has more proof that he was living somewhere else because he was paying for it.

Yep it could be argued either way and I wouldn't be surprised, if you asked two HMRC chaps, you'd get two different answers. I think you are right though that the case is stronger for the OP if he can prove he's paying something to his parents

[TheFaQQer]

With regard to the cost of the accommodation I am not sure whether that would be allowable and would advise to run it past HMRC. The fact that the OP is staying there temporarily whilst looking for rented accommodation (and presumably not incurring a cost) would lead me to think that it couldn't be considered his primary accommodation. However, one of the determinants when allowing an expense is whether an additional cost has been incurred and that criteria would be met here.

The OP was renting, but has changed their permanent base at the moment, while they are looking for somewhere else. If it was me, I'd claim it, and be prepared to argue the case if it ever came up - they are living somewhere else, their possessions stay somewhere else, and the proposed rental for the contract doesn't cover a full week, which implies to me that they have somewhere else that they normally reside.

If he owned or rented somewhere else at the moment, then there wouldn't be an argument over whether that house is temporary or not. The easiest way to make it clear might be to pay his parents rent under the rent a room scheme, so they don't pay any extra tax on it, and he has more proof that he was living somewhere else because he was paying for it.

[LisaContractorUmbrella]

With regard to the cost of the accommodation I am not sure whether that would be allowable and would advise to run it past HMRC. The fact that the OP is staying there temporarily whilst looking for rented accommodation (and presumably not incurring a cost) would lead me to think that it couldn't be considered his primary accommodation. However, one of the determinants when allowing an expense is whether an additional cost has been incurred and that criteria would be met here.

[TheFaQQer]

1 - Is it ok to withdraw cash from my business account to pay the rent? (I've never withdrawn cash from the account before so sorry if it seems like a silly question!)

Yes, you can, but make sure you account for it all accurately. I would ask to pay by bank transfer if it was me.

2 - Because I don't own/rent my own property does that mean I can't claim for accommodation away from home or is it reasonable to call my parents house home as all my belongings are there and its where I would be returning to each weekend?

If you can argue that your parents home is your permanent place of accommodation, then you can claim it. I think you probably could argue that, but I am not an accountant.

3 - I will be paying myself mileage for driving from home to the rented room, I presume I can also pay myself mileage from the rented room to work and back each day?

Same as 2

4 - I'm confused whether I can claim for some/all/none of the meals I make for myself whilst I am away from home?

Same as 2 - if you have another permanent home, then you can claim. If it isn't then you can't.

[TheCyclingProgrammer]

If you can't show the rented accommodation as a temporary base then the mileage* and bought meals cannot be expensed without incurring BiK either. Ditto for overnight £5 incidentals allowance.

I think this is the key thing for OP - if his parent's cannot be proved to be his normal permanent residence, pretty much all expenses related to the temporary accommodation, travel between it and his parent's home and subsistence while he is there go out of the window. All he will be able to claim is the travel to/from the rented room to the temporary site and subsistence while on-site.

IMO his parent's house can probably be proven as his permanent residence but that is just my opinion.

[Contreras]

Concur with TM and TCP, mostly.

1. Yes if you want. But I seriously doubt the landlady's stated reason. I'd ask to pay by cheque or bank transfer (from the company account), for traceability to settle any dispute and not just with HMRC! Only drug dealers need to be carrying large wads of cash around regularly.

2. Opinions will vary. Do you usually reside at parents address while in contract? If so do you claim mileage on those contracts? Or are contracts typically all away stays?

Also remember that it's the association with business travel that let's you claim subsistence expenses. If you can't show the rented accommodation as a temporary base then the mileage* and bought meals cannot be expensed without incurring BiK either. Ditto for overnight £5 incidentals allowance.

* except for mileage between accommodation and work site, IMHO.