Reply to: Very worrying - the expenses thing

[LisaContractorUmbrella]

Not exactly, as I understand it. They're certainly being revoked, but there may be an opportunity to resubmit, i.e. for HMRC to re-evaluate. I don't recall where I read that... but, yes, they are certainly being revoked.

Info here https://www.kpmg.com/UK/en/IssuesAnd...ion-regime.pdf

[jamesbrown]

They're being scrapped altogether next year aren't they?

Not exactly, as I understand it. They're certainly being revoked, but there may be an opportunity to resubmit, i.e. for HMRC to re-evaluate. I don't recall where I read that... but, yes, they are certainly being revoked.

[WordIsBond]

They're being scrapped altogether next year aren't they?

Because we want to help small businesses, I guess.

[mudskipper]

They're being scrapped altogether next year aren't they?

I'd read that somewhere too.

[LisaContractorUmbrella]

Yep, and I suspect dispensations are going to be very hard to reinstate from next year.

They're being scrapped altogether next year aren't they?

[ndoody]

You have the right answer, it won't affect you, with the expenses claimed back from your client, as you decsribed.
Capiche?

Clear as mud, capiche...

[jamesbrown]

They did this to me every year until I got a dispensation.

Yep, and I suspect dispensations are going to be very hard to reinstate from next year.

[TheCyclingProgrammer]

The guidance from my accountant is that I don't have to complete the mileage section on my PD11 if I am claiming the he fixed mileage allowance so interesting to see how that will play out.

Mileage payments up to the prescribed amounts (AMAPs) are EXEMPT which means not only are they not taxable, they aren't reportable either so your accountant is correct.

Most travel expenses however are treated as benefits and you claim tax relief on your self assessment for business expenses. This is why they need to be reported on the P11D - at the point at which you are reimbursed for travel expenses no distinction is made on what the travel was for so its potentially a BIK. It's only when you claim the equivalent amount as business travel on your SA that you get relief on those payments.

This is also why HMRC quite regularly adjust your tax code when your P11D has travel expenses on it as it's assumed they are taxable and they usually receive the P11D before your tax return. They did this to me every year until I got a dispensation.

[davetza]

A common misconception. Generally the rules on EMPLOYEE expenses (that is, expenses incurred by on behalf of an employee in the course of doing their job, usually travel subsistence and accommodation) are the same regardless of whether the company pays or the employee pays and is reimbursed. They still need to be reported on a P11d unless you have a dispensation and the tax rules are usually the same. There are some exceptions but the wholly, exclusively and necessarily rule applies.

Going forward I don't see any reason why this would change. Having YourCo pay direct does not magically turn an employee expense into a company expense.

The guidance from my accountant is that I don't have to complete the mileage section on my PD11 if I am claiming the he fixed mileage allowance so interesting to see how that will play out.

[Contreras]

My understanding of claiming expenses is that this is when you spend the money yourself and then claim if from your company. What happens if my company pays for the travel or accommodation directly? Will this still be allowed or will this be stopped as well and if so how?

What some people don't realise is that technically (HMRC rules) travel expenses must be declared on P11D regardless of whether paid out-of-pocket and reclaimed, paid directly by YourCo, or paid directly by the client. In other words it's still regarded as a benefit that you claim back via your personal SA return to cancel out the tax. Exception to this is mileage payments at the prescribed rate.

At the moment P11D rules are often overlooked, being a nil-sum game it's a minor technicality that HMRC don't seem to care about - that will change if there is tax to be had.

[TheCyclingProgrammer]

My understanding of claiming expenses is that this is when you spend the money yourself and then claim if from your company. What happens if my company pays for the travel or accommodation directly? Will this still be allowed or will this be stopped as well and if so how?

The other issue I see with this is what happens if you have multiple contracts one through an agency and one direct (yes this has happened to me before) or if you Plan B starts generating income for your Ltd while you are working through an agency how will expenses be handled then assuming you are not allowed to claim if you are through an agency.

A common misconception. Generally the rules on EMPLOYEE expenses (that is, expenses incurred by on behalf of an employee in the course of doing their job, usually travel subsistence and accommodation) are the same regardless of whether the company pays or the employee pays and is reimbursed. They still need to be reported on a P11d unless you have a dispensation and the tax rules are usually the same. There are some exceptions but the wholly, exclusively and necessarily rule applies.

Going forward I don't see any reason why this would change. Having YourCo pay direct does not magically turn an employee expense into a company expense.

[DaveB]

My understanding of claiming expenses is that this is when you spend the money yourself and then claim if from your company. What happens if my company pays for the travel or accommodation directly? Will this still be allowed or will this be stopped as well and if so how?

The other issue I see with this is what happens if you have multiple contracts one through an agency and one direct (yes this has happened to me before) or if you Plan B starts generating income for your Ltd while you are working through an agency how will expenses be handled then assuming you are not allowed to claim if you are through an agency.

I fully expect to see it stopped somehow under the rules, I'm going to be interested how they will distinguish between a T&S type supplier to the business and one selling office supplies.
There's a lot of potential for the whole situation to be confused, unclear and full of silly inequalities, so standard practice for UK tax law, we will have to see how the rules are drafted and work out how to use them.

You'd have to declare it on your P11 and it will be taxed as a Benifit in Kind.

[TykeMerc]

My understanding of claiming expenses is that this is when you spend the money yourself and then claim if from your company. What happens if my company pays for the travel or accommodation directly? Will this still be allowed or will this be stopped as well and if so how?

The other issue I see with this is what happens if you have multiple contracts one through an agency and one direct (yes this has happened to me before) or if you Plan B starts generating income for your Ltd while you are working through an agency how will expenses be handled then assuming you are not allowed to claim if you are through an agency.

I fully expect to see it stopped somehow under the rules, I'm going to be interested how they will distinguish between a T&S type supplier to the business and one selling office supplies.
There's a lot of potential for the whole situation to be confused, unclear and full of silly inequalities, so standard practice for UK tax law, we will have to see how the rules are drafted and work out how to use them.

[davetza]

My understanding of claiming expenses is that this is when you spend the money yourself and then claim if from your company. What happens if my company pays for the travel or accommodation directly? Will this still be allowed or will this be stopped as well and if so how?

The other issue I see with this is what happens if you have multiple contracts one through an agency and one direct (yes this has happened to me before) or if you Plan B starts generating income for your Ltd while you are working through an agency how will expenses be handled then assuming you are not allowed to claim if you are through an agency.

[MrMarkyMark]

He isn't claiming the expenses from his client, he's expensing them from HisCo. HisCo is then re-charging those expenses to the end client which is just part of its overall service charge.

Doh, yes, correct !

Good explanation.