Reply to: Claiming accomodation Mon-Fri, live permanently with parents 300 miles away

[Old Greg]

Isn't 'studio flat' just a posh name for a bedsit?

Studio would not have shared kitchen or bathroom facilities. Ideal for a Monday to Friday stay away from home.

[nigelbb]

Studio flat may be the answer. I would think they are available in most locations where there is contract work.

Isn't 'studio flat' just a posh name for a bedsit?

[Old Greg]

It's all going to depend on the supply of local housing isn't it? In most towns & cities a typical one bed property is going to be a pretty crummy bedsit. It goes beyond the number of bedrooms. It's all but impossible to find a one bed property with a kitchen, bathroom & living room. Why should you be forced to live in a bedsit or share a house Monday to Friday while working away on business? Provided the accommodation is reasonable & cheaper than a hotel the fact that it's got two or three bedrooms is irrelevant if no equivalent one bed properties are available in the location.

Studio flat may be the answer. I would think they are available in most locations where there is contract work.

[nigelbb]

What the OP describes is entirely acceptable as renting accommodation for the length of the contract should fit into the wholly and exclusively for business purposes definition. As long as the property you rent is not excessive (if you rent a two bed property then you are on dodgy ground and if you invite members of your family to live there you would be too).

It's all going to depend on the supply of local housing isn't it? In most towns & cities a typical one bed property is going to be a pretty crummy bedsit. It goes beyond the number of bedrooms. It's all but impossible to find a one bed property with a kitchen, bathroom & living room. Why should you be forced to live in a bedsit or share a house Monday to Friday while working away on business? Provided the accommodation is reasonable & cheaper than a hotel the fact that it's got two or three bedrooms is irrelevant if no equivalent one bed properties are available in the location.

[handyandy]

A friendly landlord could provide a contract for 5 day accommodation surely?
Managed apartments are often done on a 3, 4 or 5 out of 7 day basis, and they often let you leave your stuff in the apartment.
If you CAN'T use it at the weekend then it's surely fits the 'wholly and exclusively for' rule?

Hmm - so what you're suggesting is to get someone to structure a contract artificially for tax avoidance purposes when you don;t actually need to. Not so smart if you do get investigated and they ask the landlord what that weird contract was all about and did it work like that in practice and he has a sudden sphincter twitch. That will stay on your tax record as a little red marker for a long time. No need to do it - play it straight it is a fully legit business expense.

Of course if you're an MP you can claim expenses to pay a mortgage and trouser any profit made. No idea why they don't have to meet the same rules....

You need to play catch up - that was about 5 years ago and they've changed the rules on MP's since then so they can only claim rent and not mortgage interest payments. Whilst I have no time for those to**ers their expenses system is now very transparent (well, until the next scandal )

[Lance]

Thanks all for the replies,

I'm not too concerned with 5 or 7 days, actually I am happy to claim 5 if it keeps HMRC somewhat happy as the difference is not significant.

A friendly landlord could provide a contract for 5 day accommodation surely?
Managed apartments are often done on a 3, 4 or 5 out of 7 day basis, and they often let you leave your stuff in the apartment.
If you CAN'T use it at the weekend then it's surely fits the 'wholly and exclusively for' rule?


Of course if you're an MP you can claim expenses to pay a mortgage and trouser any profit made. No idea why they don't have to meet the same rules....

[handyandy]

What the OP describes is entirely acceptable as renting accommodation for the length of the contract should fit into the wholly and exclusively for business purposes definition. As long as the property you rent is not excessive (if you rent a two bed property then you are on dodgy ground and if you invite members of your family to live there you would be too). Even if you stay an occasional weekend it should not be an issue. Just because your permanent address is your parents house that's no issue - presumably that is also where you are registered to vote, have your doctors, get letters from HMRC, etc....

I'd just remind people this is not something that is exclusive to contractors - many people in permanent jobs have to work at other locations (whether you are sent to a distant office of your own company or if you are an employee of a consultancy working at a clients office). I often see people rock up who are consultants and have a flat or serviced apartment rented for them by their company (less often they rent it themselves and get reimbursed). Frequently people will stay weekends, especially if the trip home is long or expensive but not always. All of this is treated as deductible expenses but their companies.

I've also benign the same situation as a permie where I've gone to an overseas location and stayed at rented accommodation. I have on occasion travelled overseas and stayed over a weekend (although a 12 hour flight on a friday night followed by one back on a saturday night is probably exceptional in terms of long journeys).

On top of this - when I was contracting a few years back (I understand there may have been some evolution of HMRC practice in the last 7 years but I don;t think it invalidates this) I rented a one bedroom furnished flat because I was too far from home to commute. I also claimed council tax, utility bills and a daily subsistence allowance (£5 a day I think). I claimed these as wholly and exclusively for business purposes - as I never had an investigation I can;t say for sure it wouldn't have been questioned but I don;t think it would have been likely. Interestingly I did this with two separate properties - this first I rented in my own name and the second my LTD was the tenant - did;t really make any difference either way.

If you want to look at HMRC's own internal guidance then this may be helpful https://www.gov.uk/hmrc-internal-man...anual/eim31836

Just remember - the test at the end of the day is whether it is wholly and exclusively for business purposes - so don;t take the proverbial.

HA

[AlexAmsterdam]

I'm in more or less similar situation. My home is in Amsterdam and I'm paying mortgage, utilities, etc. for the flat. Now I'm working on a 6 month contract in London and rented a flat here for 1,5k per month which I'm writing off as a Company expense.
I do go back often to Amsterdam BUT not every week. So I'm staying Sat and Sundays at a flat and still deducting it. My accountant said it's fine.
I mean I would pay 1.5k anyways even if I go back and forth every week, but in additional I would spend extra 5-600 on tickets and travel which I would book as company expense as well and hence pay less tax.
If I book a hotel only Mon-Fri I would spend at least 2.5k + every week tickets which is more then what I'm spending now having a flat in London.
I mean at the end of the day it makes total economic sense to do this in such a way instead of leaving from a hotel, isn't it?

[LondonManc]

If you've rented accommodation solely for the purpose of business use, then it's fine.
I don't see how they can claim different. As PC says, if you've worked late on a Friday, setting off home on a Saturday morning is taking risk out of the business (the consultant driving tired late on Friday adds considerable risk to future revenue streams).

My accountant has confirmed that sole renting, house-share renting or hotels are equally as fine as long as they are solely for business use. Typically if the enemy comes to London instead of me going home, we'll book in a hotel for the weekend that is paid from personal funds.

[sharky]

I've spent a while looking. And failed I'm afraid.

But to narrow it down a bit...

The basic premise is that in order to claim the additional costs related to the accommodation "for work" then you must have a "ppr" (permanent principal residence). (The reasoning here is I could 'be itinerant' and simply rent accommodation at my various transient workplaces and miraculously claim relief on the. Obviously in this extreme case there is no additional cost since the the purpose of it is to provide shelter).

So, the question you need to get answered is "Does living at home with my parents count as a PPR?".

I don't know the answer to that. What constitutes a PPR is not enshrined in law.

i am in a similar predicament work away Monday to Friday and return to my parents home at weekend ( I do co own the property with the parents @ 50%) so can easily call this my main residence.

"Main Residence" has not been defined in UK law but the courts do have some case law to fall back on see Doncaster Metropolitan Borough Council v Stark.

If a person is forced away from the property that would ordinarily be called "home" because of employment but still occasionally return to that property, then it is still classed as their main residence. In Doncaster Metropolitan Borough Council v Stark,[3] Mr Stark, an RAF serviceman, returned to his matrimonial home only when on leave. The court rejected Mrs Stark's claim that she was entitled to the single person's 25% rebate on rates owed the Council. The court ruled that she was not a single person, because the property was also Mr Stark's main residence, that is, where Mr Stark would have lived were it not for the demands of his occupation.

It case by case issue but if your on the Electoral Role at a address have all Bank and Driver Licence at this address too courts would class this as you "Main Home". Also make sure that you being at your parents home dose not impact any
state benefits or council tax reductions your parents may be claiming, you may be alright with HMRC but end up landing your parents in court for benefits fraud.

[psychocandy]

One thing. You're working away mon-fri. Its cheaper to rent a flat for the duration rather than pay for 4 nights in a hotel. Im guessing most flat rentals are not just mon-fri. So this can be easily justified in terms of being a business expense since you've also got a valid residence elsewhere.

OK, might get grief for this - but who is going to know that the flat is empty every weekend? Not as if HMRC are going to stake the place out just in case you're there at 9am on a Saturday am. (Although surely that would be allowable if you just couldnt be arsed to drive home Friday night - HMRC cant force this!).

[ASB]

If you do happen to come across it, that would be a great help!

I've spent a while looking. And failed I'm afraid.

But to narrow it down a bit...

The basic premise is that in order to claim the additional costs related to the accommodation "for work" then you must have a "ppr" (permanent principal residence). (The reasoning here is I could 'be itinerant' and simply rent accommodation at my various transient workplaces and miraculously claim relief on the. Obviously in this extreme case there is no additional cost since the the purpose of it is to provide shelter).

So, the question you need to get answered is "Does living at home with my parents count as a PPR?".

I don't know the answer to that. What constitutes a PPR is not enshrined in law.

[KRose]

I can't find a reference or any HMRC guidance related to living with parents and renting a flat elsewhere for business. But I have read it somewhere on HMRC. If I find it again I shall post a link up.

Personally I think it is entirely reasonable, but HMRC may want to challenge.

If you do happen to come across it, that would be a great help!

[northernladuk]

Why does a contractor live with his parents???

Think about all the benefits.. You might get a girlfriend, your mates won't take the piss, people won't make the assumption there is something a little bit wrong with you...

Unless this is a cultural thing I guess.

[ASB]

I can't find a reference or any HMRC guidance related to living with parents and renting a flat elsewhere for business. But I have read it somewhere on HMRC. If I find it again I shall post a link up.

Personally I think it is entirely reasonable, but HMRC may want to challenge.