Reply to: Its been a while - return to contracting

[northernladuk]

Having spent nearly 4 years working away from home it the only chance at the moment of being home more! I Spent 11 years (89-00) contracting and following the work, i'm well aware it might only last 12 months, but better that than no prospect of doing so.

We move to South Wales, where the rates, salary and contract, are very provincial, and at the moment can't afford a 50% drop! So having to work away.

More like bank on a gig lasting 3 months and the rest is a bonus.

[polski]

Hi OP welcome back. I'm surprised that you say contracting will help you spend more time at home. It often means more travel, depending on where you live.

Having spent nearly 4 years working away from home it the only chance at the moment of being home more! I Spent 11 years (89-00) contracting and following the work, i'm well aware it might only last 12 months, but better that than no prospect of doing so.

We move to South Wales, where the rates, salary and contract, are very provincial, and at the moment can't afford a 50% drop! So having to work away.

[northernladuk]

New rules came in April 16. Check the Future of Contracting forum.

If you follow the link you posted and the click in the expenses link it takes you to a page that tells you about IR35. Need to read more.

What if I’m inside IR35, what expenses can I claim?

If your contract is caught by IR35 then the only expenses claimable are: administration expenses which are fixed at 5% of your contract income, , pension contributions and certain professional subscriptions. You should however, still record and receipt all business expenses.

[yMyjgT]

you can't claim travel and subsistence expenses due to your IR35 status.

Just looking at a new contract myself, which the wording squarely lands inside IR35.....
I thought you could continue to claim fuel and accommodation?

If you are inside/caught by IR35 is there any benefit in trading through my own limited company?
If your contract and working practices look like you are inside IR35 you can still claim: traveling and accommodation expenses.....

[missinggreenfields]

Assuming I am in 'IR35', is there no allowable expense? And does the 24 month rule mean that after this period, the client is still liable for something even if I'm paying myself most of the money in salary?

Correct - if you are inside IR35 then you cannot claim travel and subsistence expenses.

The 24 month rule is irrelevant, because you can't claim travel and subsistence expenses due to your IR35 status.

[northernladuk]

No. 24 month rule relates to not being able to claim T&S when you know you will be working in the same geographic location for over 24 months. Plenty to read up on this in the links to the right. -->

[unixman]

Hi OP welcome back. I'm surprised that you say contracting will help you spend more time at home. It often means more travel, depending on where you live.

[polski]

Further...

Hi,
for first contract I'm not expecting high travel costs. Part of the reason for the move is to get home daily. Either petrol costs around 80 mile/day or look into season ticket. either way it's still less than it has been in the past, but it will be the same site for nearly 100% of the time.

Assuming I am in 'IR35', is there no allowable expense? And does the 24 month rule mean that after this period, the client is still liable for something even if I'm paying myself most of the money in salary?

Umbrellas were only just starting when I last contracted as a response to IR35, but I have to say I'm not minded to trust them. Happy with a limited company, just don't want the hassle of proving I'm not out to avoid paying tax. Been there, done that, got many T-shirts. Not likely to have multiple contracts, so probably firmly in the IR35 claws so no point fighting it.

Pension contributions likely to be the main benefit, and I'm hoping there's no (reasonable) limit on the level of payments.

As I haven't got the contract yet , I'm just researching the ground, but there is likely to be public sector involvement so not sure if that will make a difference.

Thanks

[missinggreenfields]

Strictly speaking it's if you're under SDC that means you can't claim your daily travel expenses (but not other travel expenses), not whether you're inside IR35. If you pay it all out as salary then really IR35 is irrelevant and although they could in theory investigate you you don't have anything to worry about. It also means no having to pay for QDOS or IPSE; no worrying about getting contract reviews, and no worrying about working practices: just tell the client you're happy to do whatever and get on with earning a living. Which is nice.

If you're happy to make hefty pension contributions it's not so bad.

SDC is the umbrella check
IR35 is the limited company check

At the moment, one could be much harder to pass than the other.

[mudskipper]

Strictly speaking it's if you're under SDC that means you can't claim your daily travel expenses (but not other travel expenses), not whether you're inside IR35. If you pay it all out as salary then really IR35 is irrelevant and although they could in theory investigate you you don't have anything to worry about. It also means no having to pay for QDOS or IPSE; no worrying about getting contract reviews, and no worrying about working practices: just tell the client you're happy to do whatever and get on with earning a living. Which is nice.

If you're happy to make hefty pension contributions it's not so bad.

It depends how you're operating. The 'rule' for a limited company is 'IR35'. If you're paying everything as salary, the guidance says you should still apply the IR35 test to determine entitlement to claim T&S. For a brolly, the test is SDC.

[VectraMan]

Depends if there are significant travel and subsistence expenses - if there are, then you could operate through a limited company, be outside IR35, pay everything out as PAYE, but still claim expenses.

Chances of an IR35 investigation must be low if you're already paying out everything in PAYE and NICs, but you could still claim your travel and subsistence.

Strictly speaking it's if you're under SDC that means you can't claim your daily travel expenses (but not other travel expenses), not whether you're inside IR35. If you pay it all out as salary then really IR35 is irrelevant and although they could in theory investigate you you don't have anything to worry about. It also means no having to pay for QDOS or IPSE; no worrying about getting contract reviews, and no worrying about working practices: just tell the client you're happy to do whatever and get on with earning a living. Which is nice.

If you're happy to make hefty pension contributions it's not so bad.

[missinggreenfields]

Would you not be better off using an umbrella if you aren't going to make use of the tax benefits etc of running a LTD company. I think the Umbrella fees will be cheaper than the cost of running your LTD, but might be wrong here?

Depends if there are significant travel and subsistence expenses - if there are, then you could operate through a limited company, be outside IR35, pay everything out as PAYE, but still claim expenses.

Chances of an IR35 investigation must be low if you're already paying out everything in PAYE and NICs, but you could still claim your travel and subsistence.

[missinggreenfields]

would the 24 month rule force me to change contracts?

You could still be caught by the 24 month rule.

[doconline]

Would you not be better off using an umbrella if you aren't going to make use of the tax benefits etc of running a LTD company. I think the Umbrella fees will be cheaper than the cost of running your LTD, but might be wrong here?

[mudskipper]

If you operate "inside" IR35, then you need to operate a deemed salary payment on 95% of your income (including employers NI).

You cannot claim travel and subsistence to the location of your contract if you are inside IR35, so the 24 month rule is irrelevant.