Subsistence Allowance question

[WordIsBond]

EIM30295 - Employment Income Manual - HMRC internal manual - GOV.UK
It states that you can pay both subsistence and incidental overnight expenses.

More on incidental overnight expenses:
exempt from tax and NIC: NIM06015 - National Insurance Manual - HMRC internal manual - GOV.UK
amount: EIM02730 - Employment Income Manual - HMRC internal manual - GOV.UK

Subsistence / scale rates:
EIM05250 - Employment Income Manual - HMRC internal manual - GOV.UK
Expenses rates for employees travelling outside the UK - GOV.UK

In short, you can personally pay your expenses and then have your company pay you the scale rates and also the overnight incidentals per diem (£5 in UK, £10 for nights overseas) tax free, no matter what you spent.

The scale rates do not include travel -- air fare, travel from airport to hotel. I always pay these with my company card but if you pay with your personal card you should have your company reimburse the actual amount. They do not include client entertainment (if you take a client to dinner, for instance), they would only include your dinner. They do include hotel to client office taxi fare.

You are only supposed to claim scale rate for things for which you actually incurred an expense. If a client takes you to dinner, you cannot claim the scale rate for that meal. If your brother lives there and you stay with him instead of in a hotel, you aren't supposed to claim scale rate for lodging. If you choose to walk 1/2 mile to your client's office instead of taking a taxi, technically you are not supposed to claim scale rate for that because you incurred no expense. If it was raining and you didn't bring a brolly and you decided to buy one just for the walk and then discard it, arguably that's a cost of getting to the client office in lieu of taxi and you could claim scale rate. It's an argument you might lose if HMRC ever checked. Your actual expense can be far below the scale rate and that's fine but if you actually don't spend anything you aren't supposed to claim. How HMRC ever knows, I don't know, but it's not enough savings to make it worth looking in my mirror and seeing a tax cheat. I only claim when I've had an actual expense.

If your actual expenses exceed scale rates, you can have the company pay them and not use the scale rates. In general, the scale rates are reasonably generous and I've never had a trip where actual expenses exceeded them.

[irishcontractor]

Where you are tax resident only impacts where you pay tax on your wordwide earnings. You can be potentially liable to pay income tax on earnings from day one in some countries. You may want to get professional advice.

Ohh right, ok I'll look into that. cheers

[TheCyclingProgrammer]

I don't work in the same place every rotation, one 6 week rotation could be Greece, the next Italy the next Spain and even then it can change half way through and I end up in another country.

As its only 6 weeks at a time as far as I was aware I don't spend enough time there to pay tax in those countries and also as I live in the UK when i'm off so HMRC consider's me resident for tax purposes, also as I invoice through my UK LLC I have to pay UK Corp Tax.

That is my understanding, please correct me if I am wrong. Cheers

Where you are tax resident only impacts where you pay tax on your wordwide earnings. You can be potentially liable to pay income tax on earnings from day one in some countries. You may want to get professional advice.

[Old Greg]

OK. OK. I'll take that on the chin.

I should have read your link.
I should not have assumed that my outdated understanding was still correct.
I should not post answers when drunk.

Hang on a minute.

[irishcontractor]

Surprised no one has mentioned he should in fact be paying the tax in the country he is working not UK tax


Sent from my iPhone using Contractor UK Forum

I don't work in the same place every rotation, one 6 week rotation could be Greece, the next Italy the next Spain and even then it can change half way through and I end up in another country.

As its only 6 weeks at a time as far as I was aware I don't spend enough time there to pay tax in those countries and also as I live in the UK when i'm off so HMRC consider's me resident for tax purposes, also as I invoice through my UK LLC I have to pay UK Corp Tax.

That is my understanding, please correct me if I am wrong. Cheers

[ladymuck]

HMRC rates a can be found at Expenses rates for employees travelling outside the UK - GOV.UK

Handy! I've bookmarked that. Don't tend to travel for business overseas but, one day, Rodders...

[Lance]

I do find it funny how many people continue to post rubbish after the actual details from hmrc have been posted - which are now very clear.

And the instructions are very clear you need some receipts to prove the person has been there but you don't need all of them so if some are lost or even "lost" provided it's just the scale allowance it doesn't matter.

OK. OK. I'll take that on the chin.

I should have read your link.
I should not have assumed that my outdated understanding was still correct.
I should not post answers when drunk.

[eek]

Surprised no one has mentioned he should in fact be paying the tax in the country he is working not UK tax


Sent from my iPhone using Contractor UK Forum

That was not the question that was asked and while that was also my immediate thought (and why I've never taken up any of the offers I've received) there isn't enough details to say if that is actually the case or that an overseas company is involved in the work.

And I've seen enough oil people on the Schiphol - teesside flights to know it's not worth worrying about it.

[GhostofTarbera]

I do find it funny how many people continue to post rubbish after the actual details from hmrc have been posted - which are now very clear.

And the instructions are very clear you need some receipts to prove the person has been there but you don't need all of them so if some are lost or even "lost" provided it's just the scale allowance it doesn't matter.

Surprised no one has mentioned he should in fact be paying the tax in the country he is working not UK tax


Sent from my iPhone using Contractor UK Forum

[irishcontractor]

I do find it funny how many people continue to post rubbish after the actual details from hmrc have been posted - which are now very clear.

And the instructions are very clear you need some receipts to prove the person has been there but you don't need all of them so if some are lost or even "lost" provided it's just the scale allowance it doesn't matter.

Thanks

[eek]

His missus does the books, is different to his missus is an accountant.
She’s the former.


You can’t claim tax back on something you’ve not actually incurred a cost for.
There are simple rules. You should read the links to the right...

I do find it funny how many people continue to post rubbish after the actual details from hmrc have been posted - which are now very clear.

And the instructions are very clear you need some receipts to prove the person has been there but you don't need all of them so if some are lost or even "lost" provided it's just the scale allowance it doesn't matter.

[irishcontractor]

His missus does the books, is different to his missus is an accountant.
She’s the former.


You can’t claim tax back on something you’ve not actually incurred a cost for.
There are simple rules. You should read the links to the right...

She is a chartered accountant apparently according to her email signature and linkdin profile hence why I was confused by what she said and what other accountants have told me, she did send me this quote when I asked her if what she told me was correct but still wanted to hear from anyone who may have been through this before.

"In HMRC’s words:

“From 6 April 2019, employers will no longer be required to operate a system for checking an employee’s expenditure in order to make payments free of tax in relation to expenses paid or reimbursed using benchmark scale rates. Instead, employers will only be required to ensure that employees are undertaking qualifying travel on occasions in respect of which a payment is made or reimbursed and that neither the employer nor any other person knows or suspects or could reasonably be expected to know or suspect, that travel was not undertaken.”

[Lance]

Subsistence Allowance question

His missus does the books, is different to his missus is an accountant.
She’s the former.


You can’t claim tax back on something you’ve not actually incurred a cost for.
There are simple rules. You should read the links to the right...

[eek]

HMRC rates a can be found at Expenses rates for employees travelling outside the UK - GOV.UK

[irishcontractor]

Hi Folks,

Sorry if this has been asked before but new to the whole contracting business, I have a UK LLC that I use to invoice my client at the end of every month for the IT work I do.

The client is a UK based and registered company but all the work I carry out for the client takes place in Europe, (currently working a 6 on 3 off rotation) the client pre-pays for our accommodation in Europe so we don't pay for that, we do pay for our own food when we are away though, however…..as per the contract, they pay X day rate and then £36 a day subsistence allowance on top.

One the blokes I work with, his missus is his accountant, she said to me that we put the £36 a day (which is £1080 a month) through as an expense and that way it's not taxed, is this correct ?? as I spoke to another accountant who said no, if you spend £500 that month on food then £500 is an expense and the other £580 is taxable but he didn't really seem interested in talking to me tbh and just wanted to get off the phone.

This blokes missus also said you don't need receipts for subsistence allowance and referred to something about different countries having different allowances, Is that also true? I apologise if this is obvious but I haven't a clue

Thanks for the help.