Yes I think you're right.
I suppose that given the limited number of invoices and expenses I've had to deal with, it never really occurred to me to create a seperate account.
- Visitors can check out the Forum FAQ by clicking this link. You have to register before you can post: click the REGISTER link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. View our Forum Privacy Policy.
- Want to receive the latest contracting news and advice straight to your inbox? Sign up to the ContractorUK newsletter here. Every sign up will also be entered into a draw to WIN £100 Amazon vouchers!
Reply to: Do reinbursed expenses count as income?
Collapse
You are not logged in or you do not have permission to access this page. This could be due to one of several reasons:
- You are not logged in. If you are already registered, fill in the form below to log in, or follow the "Sign Up" link to register a new account.
- You may not have sufficient privileges to access this page. Are you trying to edit someone else's post, access administrative features or some other privileged system?
- If you are trying to post, the administrator may have disabled your account, or it may be awaiting activation.
Logging in...
Previously on "Do reinbursed expenses count as income?"
Collapse
-
More likely they will use it as a stick to beat you with during an aspect investigation.
It may not be a legal requirement, but it makes good business sense. It stops you getting your money and your companies money mixed up. Bear in mind you have to also document everything and show the proportion of interest that is yours and the proportion of interest that belongs to the company.
If anything you are making it harder for yourself by shoving everything through your account.
Leave a comment:
-
Originally posted by basshead View PostHow do you then separate the interest you receive on the account into that accrued on the business versus personal balances?
http://www.hmrc.gov.uk/pdfs/sabk4.htm#h15
...so I presume the powers that be aren't bothered.
Leave a comment:
-
Even like this - you need to split your "business " earnings away from your personal money - at least into a separate account in your name.
Otherwise how do you keep track of what you owe HMRC - as a bare minimum - and be able to prove it!
To echo other peoples comments YOU NEED TO TALK TO AN ACCOUNTANT.
Leave a comment:
-
Originally posted by Ardesco View PostIf you are self employed you have a business.
And it sounded like you were talking about dividends when you wrote...
show how much money you are taking out of the business as your incomeOriginally posted by Ardesco View PostYou are confusing your money with your businesses money. You need to separate the two or you will get in trouble further down the line.
Originally posted by Ardesco View PostTreat all money paid by the client as business income. Treat your expenses as business expenditure. Whatever is left over is profit and you can take that as your personal income. You then need to pay tax on this.
The question is just whether to put the expenses on the form given that they were reimbursed. I think yes and so does the help line.
I was trying to reply to your statement...
If the expenses were incurred exclusively for business reasons you shouldn't have to declare that income on your tax form.Last edited by IanIan; 29 January 2008, 12:24.
Leave a comment:
-
Originally posted by IanIan View PostYes I did register as self employed.
But remember I don't have a business. So everything I get paid is my personal income.
Originally posted by IanIan View PostYes but the guy on the advisory line said that, because the expenses were included in the total on the invoice, then I need to add them to the tax form as expenses.
I think this makes sense. Otherwise the total of one's invoices isn't going to add up to the income plus expenses specified on one's tax return. It would look like I was under reporting my income if someone were to go and add up the 'money in' on my bank statements.
Treat all money paid by the client as business income. Treat your expenses as business expenditure. Whatever is left over is profit and you can take that as your personal income. You then need to pay tax on this.
You really need to talk to an accountant!
Leave a comment:
-
Yes I did register as self employed.
Originally posted by Ardesco View PostYou should then be able to offset business expenses against your business income before working out what you have taken out of the business.
Originally posted by Ardesco View PostIf the expenses were incurred exclusively for business reasons you shouldn't have to declare that income on your tax form.
I think this makes sense. Otherwise the total of one's invoices isn't going to add up to the income plus expenses specified on one's tax return. It would look like I was under reporting my income if someone were to go and add up the 'money in' on my bank statements.Last edited by IanIan; 29 January 2008, 10:47.
Leave a comment:
-
That last quote is not something I said. Since you don't have a LTD company and can't take dividends IR35 won't apply to you. You will be taxed normally on all of your income (i.e. IR35 caught)
Leave a comment:
-
Right, in that case you're a sole trader, have you registered yourself as self employed? If not you need to do so.
You should invoice the client for the cost of the expenses, this money will in effect be your businesses money.
You should then be able to offset business expenses against your business income before working out what you have taken out of the business. If the expenses were incurred exclusively for business reasons you shouldn't have to declare that income on your tax form.
http://www.businesslink.gov.uk/bdotg...3859209&r.s=sc
See the above link for more information.
Leave a comment:
-
Originally posted by LisaContractorUmbrella View PostHi IanIan,
can you confirm whether the value of the expenses was paid directly to you by the client or whether it was reimbursed to you via your umbrella company?
Originally posted by ASBSo what you saying seems to be:-
- You (personally) sent an invoice for 1000 quid plus 200 expenses to some person.
- The client paid the expenses direct to you
- Some person is going to pay you 1000 not the 1200 you invoice
Originally posted by ArdescoSo you don't have a company and you aren't using an umbrella?
Originally posted by ArdescoHow are you contracted to the client?
Originally posted by ArdescoAre you a temp working for the client and being paid via PAYE?
Originally posted by ArdescoWarning. Being paid directly expenses incurred from the client is likely to be bad new for your IR35 status. It would be better to refuse the payment (or return it) saying "I'm sorry but the arrangement was that my company billed the expenses.Last edited by IanIan; 29 January 2008, 09:56.
Leave a comment:
-
Originally posted by IanIan View PostAhh, I don't have a company. They paid me a personal check after I paid for it personally.Originally posted by IanIan View PostNo umbrella. I was paid directly.
How are you contracted to the client?
Are you a temp working for the client and being paid via PAYE?
If they are paying you through PAYE they should have already dealt with the tax issue.
Leave a comment:
-
Originally posted by IanIan View PostWell the dude on the help line said the same thing.
The key point is that I put the expenses on the invoice. Thus the invoice total gets added to my total income and then the expenses from the invoice are added to the total expenses on the tax return and, as you say, they cancel each other out.
Makes sense to be putting all this on the tax return.
So what you saying seems to be:-
- You (personally) sent an invoice for 1000 quid plus 200 expenses to some person.
- The client paid the expenses direct to you
- Some person is going to pay you 1000 not the 1200 you invoice
So you:-
- Put 200 in expense received type box on you personal tax return.
- Put 200 in the expenses claimed box (thus cancelling it out)
Now you need to issue a credit note to whoever you originally issued the 1200 invoice for.
If you are in fact self employed and you issued the invoice to the client directly (which seemed tyo be implied), then what is the problem? Simply put the client makes 2 payments against the income.
---------------------------
Warning. Being paid directly expenses incurred from the client is likely to be bad new for your IR35 status. It would be better to refuse the payment (or return it) saying "I'm sorry but the arrangement was that my company billed the expenses."
Leave a comment:
-
Hi IanIan,
can you confirm whether the value of the expenses was paid directly to you by the client or whether it was reimbursed to you via your umbrella company?
Leave a comment:
- Home
- News & Features
- First Timers
- IR35 / S660 / BN66
- Employee Benefit Trusts
- Agency Workers Regulations
- MSC Legislation
- Limited Companies
- Dividends
- Umbrella Company
- VAT / Flat Rate VAT
- Job News & Guides
- Money News & Guides
- Guide to Contracts
- Successful Contracting
- Contracting Overseas
- Contractor Calculators
- MVL
- Contractor Expenses
Advertisers
Contractor Services
CUK News
- Streamline Your Retirement with iSIPP: A Solution for Contractor Pensions Sep 1 09:13
- Making the most of pension lump sums: overview for contractors Sep 1 08:36
- Umbrella company tribunal cases are opening up; are your wages subject to unlawful deductions, too? Aug 31 08:38
- Contractors, relabelling 'labour' as 'services' to appear 'fully contracted out' won't dupe IR35 inspectors Aug 31 08:30
- How often does HMRC check tax returns? Aug 30 08:27
- Work-life balance as an IT contractor: 5 top tips from a tech recruiter Aug 30 08:20
- Autumn Statement 2023 tipped to prioritise mental health, in a boost for UK workplaces Aug 29 08:33
- Final reminder for contractors to respond to the umbrella consultation (closing today) Aug 29 08:09
- Top 5 most in demand cyber security contract roles Aug 25 08:38
- Changes to the right to request flexible working are incoming, but how will contractors be affected? Aug 24 08:25
Leave a comment: