Reply to: Another Expenses Question !!

[TheFaQQer]

Interesting, I didn't know about that. I wonder if I can rent my wife a room.....

Also interesting is that although HMRC refer to it fairly often as "an average of approx £80 a week" there's nothing to stop you renting a room at £160 a week for half the year, or even renting a room from your mate at £4250 a week for one week (although that may seem a tad suspicious).

[Ardesco]

Interesting, I didn't know about that. I wonder if I can rent my wife a room.....

[TheFaQQer]

They may change their mind come the end of the financial year where they realise that they have got another £4,250 worth of income to pay tax on.... The only way I can see it not burdening them is if they don't work at all....

Rent a Room scheme income is tax free - http://www.direct.gov.uk/en/MoneyTax...ome/DG_4017804

Assuming that they are only providing a room, rather than bed and breakfast / lanudry etc. - in which case the rent can still be tax free, but the extras aren't.

[Ardesco]

rent a room limit is £4250 per tax year.
I had exactly same problem today. Got my friend to write a reciept since it doesn't actually burden them tax wise to do so.

It's still less than 25 per night dispensation though for that you need an umbrella company.

They may change their mind come the end of the financial year where they realise that they have got another £4,250 worth of income to pay tax on.... The only way I can see it not burdening them is if they don't work at all....

[Peoplesoft bloke]

What is a reasonable process for making checks? I know if I send an employee to work on a client site that he's going to be claiming some expenses. If he claims £100 a night for the hotel, and £40 for the meals, that's not unreasonable, given that I know he really is working away from home. Is checking the expenses are within reasonable limits sufficient? Do HMRC have any guidelines about what checks the employer should make?

Anyway in ltdco cases the employer has an excellent checking procedure - the MD accompanies the employee.

Hmm. Let's see. I work away from home. My company has a procedure of checking employee expenses by sending someone to check. My wife could do that. As she's only with me in order to fulfill the company checking policy, that's entirely necessarily and solely for business purposes, so the company can pay her expenses too!

In fact, when we take our holiday in the Seychelles, she should also come with me, so that she can disallow the expense. Then her expenses are paid for by the company.

You're starting to sound like the former head of the National Audit Office, Sir John Bourne.

[TheFaQQer]

What is a reasonable process for making checks? I know if I send an employee to work on a client site that he's going to be claiming some expenses. If he claims £100 a night for the hotel, and £40 for the meals, that's not unreasonable, given that I know he really is working away from home. Is checking the expenses are within reasonable limits sufficient? Do HMRC have any guidelines about what checks the employer should make?

Anyway in ltdco cases the employer has an excellent checking procedure - the MD accompanies the employee.

Hmm. Let's see. I work away from home. My company has a procedure of checking employee expenses by sending someone to check. My wife could do that. As she's only with me in order to fulfill the company checking policy, that's entirely necessarily and solely for business purposes, so the company can pay her expenses too!

In fact, when we take our holiday in the Seychelles, she should also come with me, so that she can disallow the expense. Then her expenses are paid for by the company.

For most, it's an irrelevant question, since you need a dispensation to be able to do this.

As for what's a reasonable check, you'd need to ask HMRC. If you have a dispensation, then ring HMRC and discuss it with them - I'm sure that they will give some degree of non-binding advice that they could backtrack on. If you haven't got a dispensation, then the point is moot.

[NotAllThere]

If they don't have the processes to make the checks, then it cannot be claimed.

What is a reasonable process for making checks? I know if I send an employee to work on a client site that he's going to be claiming some expenses. If he claims £100 a night for the hotel, and £40 for the meals, that's not unreasonable, given that I know he really is working away from home. Is checking the expenses are within reasonable limits sufficient? Do HMRC have any guidelines about what checks the employer should make?

Anyway in ltdco cases the employer has an excellent checking procedure - the MD accompanies the employee.

Hmm. Let's see. I work away from home. My company has a procedure of checking employee expenses by sending someone to check. My wife could do that. As she's only with me in order to fulfill the company checking policy, that's entirely necessarily and solely for business purposes, so the company can pay her expenses too!

In fact, when we take our holiday in the Seychelles, she should also come with me, so that she can disallow the expense. Then her expenses are paid for by the company.

[TheFaQQer]

Consequently if the employer pays the employee a reasonable overnight allowance for expenses incurred staying with the friend or relative, this allowance may be included in a dispensation as long as the employer has processes in place to check that the employee stayed with a friend or relative and that the employee incurred an expense.

If they don't have the processes to make the checks, then it cannot be claimed.

If HMRC do an audit, they you are in trouble - same as if you claim for anything else that you don't actually spend.

[TheFaQQer]

It's still less than 25 per night dispensation though for that you need an umbrella company.

Nope - for that you need a dispensation.

Umbrella companies have a dispensation, but that does not mean that they are the only companies that do. I have one for my company, for example.

Plus, the guidelines are quite clear - you need to incur the expense!!! Even with a dispensation, the company needs to undertake reasonable checks that you incurred the expense.

[Olly]

limit is 4250 per tax year

rent a room limit is £4250 per tax year.
I had exactly same problem today. Got my friend to write a reciept since it doesn't actually burden them tax wise to do so.

It's still less than 25 per night dispensation though for that you need an umbrella company.

[Solent]

Thanks for your replies, appreciated

[TheFaQQer]

Solent:

Yes. Up to £25 quid.

http://www.hmrc.gov.uk/manuals/eimanual/EIM30073.htm

If you have a dispensation that covers that, then up to £25 is reasonable.

I'm guessing that Solent does not have a dispensation, though, in which case a receipt would be needed.

[ASB]

Solent:

Yes. Up to £25 quid.

http://www.hmrc.gov.uk/manuals/eimanual/EIM30073.htm

[TheFaQQer]

You need a receipt.

They can claim under the Rent A Room scheme and not pay any tax on the money they receive, up to a limit of about £80 a week (IIRC).

[Sockpuppet]

You need proof you spent the money. So a receipt is the only way - esp if you are paying cash.