Expenses Question

[Barriebazg]

Thanks for all your help everyone. It seems that I am with a "variation of a Managed Service Company" (as Nixon Williams stated). I do not have a business account. So I think what I am going to have to do is now set up a business account and then ditch Paystream (at a nice transfer fee, im sure) and go with an accountant. I rushed into it all as I needed to set this up in double quick time (turns out I actually didnt really need to do it as fast!!). Anyways I think I know what I have to do next. Thanks again for all your help, its very much appreciated.

Barrie

[NewBoy]

With regards the original question...i.e. £800 for your mate and £180 for you, are you sure this is not just in the wording...

If paystream are saying that you should end up paying c.18% tax on your income (which many of these companies seem to promise, no idea if its true) then technically if you put expenses through then you will save 18% in tax...which is where the £180 from £1,000 comes from...that seems right to me.

It would be a different scenario if you were charging your client expenses and your mate was putting through £1k and you were putting through only £180...but your not.

So basically, it sounds to me like the wording is all arse about face and you can submit £1k but you will basically benefit to the tune of £180.

Might be wrong but this seems like the only viable scenario.

[Nixon Williams]

It sounds as though what you have is a variation of a Managed Service Company.

You should have control of your own bank account and be able to register on the VAT Flat Rate Scheme.

Do you recieve the interest on the bank account?

Check on the setup to ensure you are getting everything you should be and would with your own company.

Alan

[LisaContractorUmbrella]

Hi Barriebazg - basically, if you are operating through an umbrella company, expenses which are not chargeable to the client will be processed as a tax benefit which means that the value of the expense reduces the amount of your salary that is liable for tax. e.g. if you earn £500 per week and your expenses are £50 per week your taxable pay will be £450.00. However, 2 things to be aware of - any expense you claim must be supported by receipts and if you do not have a company bank account over which you have complete control you will not be able to operate in the way you are at the moment after 6th April 2007 but must revert to PAYE or open your own personal limited company over which you have total financial control.

[Barriebazg]

WTF?

Expenses are expenses.

If they are incurred wholey in the pursuit of business then you can claim them all back.

f you are also living in this room when not at work....i.e. don't have a home somewhere else then you cannot claim for it unless you want to pay the BIK.

BIK???? Whats that? I am renting a room as my house is 110miles away and dont fancy that commute.

[Sockpuppet]

WTF?

Expenses are expenses.

If they are incurred wholey in the pursuit of business then you can claim them all back.

f you are also living in this room when not at work....i.e. don't have a home somewhere else then you cannot claim for it unless you want to pay the BIK.

[Barriebazg]

Hi all,

I have a quick question that I hope some accountant, or anyone with this sort of knowledge could answer.....

I am with Paystream, just started contracting this week. So last week had to set up my own ltd co. etc etc. Well Paystream did all of that for me. I am still under the impression that I am really with an umbrella company. Although on paper I am a director of my own company and Paystream are the company secretary. After speaking to Paystream I have been told I can claim 18p of every £1 I occur in expenses (expenses are renting a room (£400 a month) and my breakfast and evening meal). Another contractor started in the exact same role as me and has been contracting for a while but this is the first time he has actually gone down the Ltd co. route. He just has an accountant that does all his admin/payroll etc etc. He has been told that he can put all of those expenses (same as mine, renting a room, breakfast and evening meal) through the company as non taxable profit. So basically he will be able to see a minimum of 80% of his expenses. These expenses are not claimed throught the client but from the Inland Revenue. So in comparison if for instance the expenses are £1000 a month he would be getting £800 of that back, where as I will be getting £180!!

Hope this makes sense to someone. Sorry if it sounds a bit retarded but I am VERY new to contracting and just trying to get my head round it all!!

Thanks
Barrie