Reply to: Daily subsistence expenses

[RichieC]

So your travel pattern is:

Home -> Work -> Home ?

According to HMRC guidance notes there is no subsistance allowable on this pattern

Even if "Home" is Your Registered Office address and "Work" is a temporary place of work where you are working on a contract for a client?

[james14]

I should think that you will find that your employer (NHS) was settling the NI and PAYE liability - but without having to put it on your P11D.

[Bluebird]

Thanks. Well, I never saw tax or NI paid, and I never declared it or was asked to or advised to declare it, and a lot of people are in the same position. Or, possibly the NHS has got this right and we've got it wrong? It's all so bloody confusing so I'll continue not claiming it.

Your employer therefore probably reimbursed the expense AFTER they had paid corporation tax on it's profits, they may well have had dispensation from HMRC not to have to provide reciepts.

However if you were subject to an income tax investigation I believe that HMRC could well be within their rights to ask you for proof of reciepts, and if unable to do so you may well get a tax bill.

Look at it this way any expenses that you claim and your employer pays HMRC doesn't recieve any NI [ both employer and employee or Income tax - that works out at about 35% of the value ] - if you claim £150 worth of expenses that have not actually been incurred, you've deprived/defrauded HMRC of about £50.

Multiply that across a year £600 then by the number of employees that claim it and you've got a really big figure - do you think HMRC would be happy with that ?

[Old Greg]

I'm not an accountant so I'm not entirely sure but I would guess there are two ways.

1. The Co will deduct the tax at source, ie your payslip shows £100 expenses, but you pay tax & NI so that you only get £75 in your pocket.

2. You get paid the £100, but have to declare it to HMRC [ P11D? ] and you'd get that as a bill ?

Thanks. Well, I never saw tax or NI paid, and I never declared it or was asked to or advised to declare it, and a lot of people are in the same position. Or, possibly the NHS has got this right and we've got it wrong? It's all so bloody confusing so I'll continue not claiming it.

[Bluebird]

OK, be gentle as I'm still quite new to this. Does the BIK mean that the individual would not see the tax paid on payslips or self-assessment or anywhere else, but that the employer would pay up?

I'm not an accountant so I'm not entirely sure but I would guess there are two ways.

1. The Co will deduct the tax at source, ie your payslip shows £100 expenses, but you pay tax & NI so that you only get £75 in your pocket.

2. You get paid the £100, but have to declare it to HMRC [ P11D? ] and you'd get that as a bill ?

[Old Greg]

what a company pays you

and what they claim against tax are different.

Your company can pay you what the hell they like, just make sure that it's taxed as BIK from a personal point of view, and is deducted from your profit AFTER corp tax has been calculated from a company point of view...

OK, be gentle as I'm still quite new to this. Does the BIK mean that the individual would not see the tax paid on payslips or self-assessment or anywhere else, but that the employer would pay up?

[Bluebird]

I've found this one odd since I started contracting (I don't claim lunch subsistence expenses by the way).

When I was a permie, employed by an NHS organisation, if I was working away from my base at lunchtime and I incurred greater costs than I would have done so had I been at my base, I was able to claim £5 from my employer without a receipt and with no tax implications. This is part of the NHS national contract, with > 1 million people working to it and I can't believe they've got it wrong from a tax point of view.

what a company pays you

and what they claim against tax are different.

Your company can pay you what the hell they like, just make sure that it's taxed as BIK from a personal point of view, and is deducted from your profit AFTER corp tax has been calculated from a company point of view...

[Old Greg]

I've found this one odd since I started contracting (I don't claim lunch subsistence expenses by the way).

When I was a permie, employed by an NHS organisation, if I was working away from my base at lunchtime and I incurred greater costs than I would have done so had I been at my base, I was able to claim £5 from my employer without a receipt and with no tax implications. This is part of the NHS national contract, with > 1 million people working to it and I can't believe they've got it wrong from a tax point of view.

[Bluebird]

Sorry to be a pedant but I wanted to elaborate on this a little. Is there a difference between what the Company allows the employee to claim as an expense and what HMRC allow the Company to claim as a business expense?

In the scenario above, the Company would have a policy to pay the Employees their lunch costs when away from the office. This would (I guess) be a BIK to the Employee and also the Company could not set it against income as a business expense on their books.

Comments?

correct, but the net effect would be the same except you'd have to fill out more paperwork.
actaully thinking about it, if the payment is a personal expense NOT reimbursed by the company, then a certain amount will come out of the dividend paid which means that it's not sunject to Tax & NI, whereas a BIK is.

[Mustang]

NO

Unless you wount be returning home on the evening i.e. staying over in a hotel etc.

If your going to be coming home every day after work then dont do it because you cant do it.

You'll need accomodation reciepts to back up your claims that you were staying away from home and therefore are claiming the cost of meals etc.

Sorry to be a pedant but I wanted to elaborate on this a little. Is there a difference between what the Company allows the employee to claim as an expense and what HMRC allow the Company to claim as a business expense?

In the scenario above, the Company would have a policy to pay the Employees their lunch costs when away from the office. This would (I guess) be a BIK to the Employee and also the Company could not set it against income as a business expense on their books.

Comments?

[Bluebird]

So your travel pattern is:

Home -> Work -> Home ?

According to HMRC guidance notes there is no subsistance allowable on this pattern

with the exception of "late working"

[damo111176]

Isn't the £5/day unreceipted personal incidental expenses (PIE) generally allowed for things like newspapers and an accumulation of smaller items you'd need to make your stay away from home pallatable, and therefore doesn't have to include meals?

Can't remember as I'm too lazy to keep all the receipts for meals so just claim the £5/day I'm away from my permanent address. Can't get many meals for a fiver these days anyway!

If the inland revenue ever question this £5/day unreceipted expenses just say it was agreed by your accountant following HM guidelines for working away from home. Worked for me when I had an expenses investigation some years ago.

When did you get investigated for and were your expenses very high. HOw did they unearth you?

[ASB]

I was going to ask the same question until I found the link below. With my old MSC I could claim 9.50 per day when away from home upto 10 hours, anything over that 23.50

http://www.hmrc.gov.uk/manuals/bimmanual/bim47705.htm

Your MSC may let you claim it. Whether HMRC will allow it is a different matter entirely. If your MSC gets investigated, or you get an aspect enquiry or a full enquiry into your SA return expect problems.

Ultimately, irrespective of any dispensations the MSC may have, the onus is on you to claim correctly.

[PAG]

So your travel pattern is:

Home -> Work -> Home ?

According to HMRC guidance notes there is no subsistance allowable on this pattern

I agree.

[Maxamus]

I beg to differ. I travel to and from a gig every day. I claim £5/day unreceipted subsistence and I have a letter from HMRC agreeing to this.

So your travel pattern is:

Home -> Work -> Home ?

According to HMRC guidance notes there is no subsistance allowable on this pattern