2 Year rule on overseas expenses

[expat]

Before the two year rule came in, when T&S was at the whim of the local inspectorate, and usually "home to office" travel wasn't claimable, there was a specific exemption for when the office was in another country. So I guess a search of http://www.hmrc.gov.uk/helpsheets/490.pdf might be in order. The exemption might still be in place.



I'm interested by Expat's experience. I know contractors who work through Swiss brollies, in Switzerland, who claim all travel, subsistence and pretty much any expense the Swiss authorities permit (which is a lot). In the usual way the expenses are paid out first, tax free, then the base salary, then the rest (after fees and deductions) is paid out as "bonus". (Some held back for sickness and holiday pay that you get at the end of the contract ).

As far as I know, HMRC just look at the amount paid (the salary + bonus), deduct the amount of tax paid in CH, and ask you to pay the amount to make it up to UK rates. They don't care about the CH expenses, because they're paid under Swiss rules, by the Swiss employer.

that is what I was trying, in my stumbling way, to say that HMRC had said to me. I.e. HMRC only look at salary (+bonus), they do not look at expenses paid abroad.

So: get the Swiss company to pay expenses before salary, and only salary gets taxed;
Get the Swiss company to pay all, then try to claim some of it as tax-exempt expenses = no chance.

My point was that HMRC stick to the rules, even if they can seem anomalous. In this case it should come to the same thing regardless of whether you get expenses separately + a reduced salary, or get it all as salary and claim expenses. But HMRC were quite clear that it was not so. They had no problem with the idea of getting expenses paid separately: i.e. they weren't just after the max tax, they were after the rules.

[NotAllThere]

Before the two year rule came in, when T&S was at the whim of the local inspectorate, and usually "home to office" travel wasn't claimable, there was a specific exemption for when the office was in another country. So I guess a search of http://www.hmrc.gov.uk/helpsheets/490.pdf might be in order. The exemption might still be in place.

An employee who is resident and ordinarily resident in the UK and who carries out all
their duties abroad is also entitled to relief if the duties:
• can only be carried out abroad - for the full cost of journeys to and from anywhere
in the UK made during the time he or she works abroad

I'm interested by Expat's experience. I know contractors who work through Swiss brollies, in Switzerland, who claim all travel, subsistence and pretty much any expense the Swiss authorities permit (which is a lot). In the usual way the expenses are paid out first, tax free, then the base salary, then the rest (after fees and deductions) is paid out as "bonus". (Some held back for sickness and holiday pay that you get at the end of the contract ).

As far as I know, HMRC just look at the amount paid (the salary + bonus), deduct the amount of tax paid in CH, and ask you to pay the amount to make it up to UK rates. They don't care about the CH expenses, because they're paid under Swiss rules, by the Swiss employer.

[expat]

Very good question. I don't know of anything which makes foreign travel a special case - but since you can't be expected to move to a foreign country permanently, perhaps there is. One for the taxman, i suspect.

Interesting, since the obvious move according to the rules (go and live near your work) would deprive HMRC of all tax income from you, you'd think they'd be against it. But I suspect that they may apply the rules (and TBH I prefer authorities that do that to those that make it up).

I know that they were prepared to in one case of mine: I had a prospect of a contract in Switzerland. Now, if I worked through my Ltd Co, then HMRC would allow travel & subsistence expenses. But of course I couldn't do that in Switzerland, I'd have to be employed by a Swiss company. In that case HMRC said that my normal place of work would be in Switzerland, and if I chose to come back to the UK every weekend, that would be a personal choice and not an allowable expense.

OTOH if I got the Swiss company to pay my travel and subsistence separately from salary, then HMRC would not regard that as any of their concern.

All very logical, but slightly unexpected in effect.

[TheBigYinJames]

i.e. will I still be able to claim overseas hotel costs if I get an extension past 2 years.

Very good question. I don't know of anything which makes foreign travel a special case - but since you can't be expected to move to a foreign country permanently, perhaps there is. One for the taxman, i suspect.

[Pondlife]

Hi All,

Anyone have any insight into whether the 2 year limit on travel expenses applies to international travel?

i.e. will I still be able to claim overseas hotel costs if I get an extension past 2 years.

TIA

PL