Claiming rental costs after moving to UK

[Bob Jones]

S338 ITEPA 2003 denies relief in respect of ordinary commuting. Ordinary commuting is essentially travel between home and a permanent workplace - home and a temporary workplace is not ordinary commuting. If a person attends a workplace to perform a task of limited duration and provided none of the other restrictions apply the workplace is temporary. Travel between home and a temporary workplace is allowable. As long as the accomodation in question is not "home" as in there is other accomodation that is "home" and is being maintained, there is extra cost as a result.
1 If I am out of work in Chester and by means of a telephone call to an agency I secure genuine temporary workplace employment in London I am not being sent to London by my employer. I have accepted employment, a new position, and I travel to London in order to take up that position - I engage an Umbrella to look after things ..... the travel and associated subsistence is allowable subject to my having a home in Chester.
2 If I am out of work and, rather than use the phone, I decide to go to London to seek employment and spend two weeks in a hotel before finding the same position as above, the workplace is temporary, Chester is home, and the travel and subsistence is allowable.
3 If I am out of work and travel to London to seek opportunities and rather than stay in a hotel I take a cheaper option of a flat on a short lease Chester is still home and the situation as in 2 applies.
4 If I am single living with parents and travel to London to seek my fortune, live in a rented flat and obtain the same position as above the London flat is home and because I am not maintaining a property elsewhere there is no allowance for accomodation and travel is restricted to London flat to workplace and return.
5 If I have a row with the Mrs and do the same as 4 the London flat is home.
6 If a married man with wife and home stays in a B & B , then has an affair with the landlady and later decides to concentrate his affections on the landlady and not return home then the "home" changes and from the date of change the travel is based on the B & B address and not the address that was the matrimonial home .. and this was an actual case about which I was consulted ....
7 The fact that in the orignal question the person concerned came here from abroad makes no difference provided it fits in with the examples quoted above. If for any reason the travel is not alowable as above and the person is non domiciled then there is the possibility of further relief under S373 but that is only if Ss 337,338 and 339 do not apply ...
Bob

[meridian]

I know he isn't sent here in the capacity of an employee - he has come here seeking employment. The heading of the HMRC instruction that you quote is "employees on secondment to the UK" EIM77010 - Appendix 1: Employees on secondment to the UK - and as it would appear that the person in queston has not been sent here on secondment it is unlikely that the instruction quoted will apply in this case. The fact that there is legisaltion relating to people coming here from abroad does not mean that this is the legislaton that must apply to them - I said in my previous comment that the law governing travel expenses is:

S337
S338/339
S373 - 375

in that order ...

any travel claim under S373 is dependent upon domicle not ordinary residence and applies ONLY if claims under S337 or S338/339 fail.

I will revise my example as folllows:

Compare this example - I live in my own home, with my wife and the dog, in Chester and I am out of work - I decide to seek my fortune and go to London. I enter into a 4 week lease on a flat - I go to an agency and towards the end of the four weeks I am offered a 12 month contract in London - I need an Umbrella so I go to .. Contractor Umbrella. I expect this to be the first of a series of temporary contracts all over the country so there is no doubt that the first assignment is temporary - I therefore rent the London flat for another 12 months - I assume we all agree that the flat in London is allowable - subsistence if applicable - plus travel Chester to London and London to client.

No, I wouldn't assume that we all agree. By your own admission, you've gone to London to seek your fortune. You haven't been sent to London by an employer.

You then gain a contract in London, simultaneously gaining an employer also in London.

The deductible cost of business travel is that which is over and above costs incurred in the course of the journey that are additional to any costs that the employee would incur if it were not for the business travel. I know you're aware of this, you've argued this in another thread. In this instance, if the friend did not gain the contract (and the employer), the costs would not be deductible as they are on his personal account and not as an employee. He has rebased himself in London (however temporarily) as his own choice, not as that of his as-yet nonexistant future employer.

For the costs to have a chance at being deductible you would need to (for example) set up a company beforehand and have the company send you to London to look for contract work.

Contrast with this example - I live in my own home, with my wife and the dog, in Paris etc etc

You refer to S339(5) - that is the 24 month/one workplace rule - I specifically discounted that by the comment in my example "I expect this to be the first of a series of temporary contracts all over the country" - therefore S339(5) doesn't apply - in my example - if it applies in practise then the claim fails....
Bob

[Bob Jones]

Meridian says

The friend is not being sent here in the capacity of an employee,

I know he isn't sent here in the capacity of an employee - he has come here seeking employment. The heading of the HMRC instruction that you quote is "employees on secondment to the UK" EIM77010 - Appendix 1: Employees on secondment to the UK - and as it would appear that the person in queston has not been sent here on secondment it is unlikely that the instruction quoted will apply in this case. The fact that there is legisaltion relating to people coming here from abroad does not mean that this is the legislaton that must apply to them - I said in my previous comment that the law governing travel expenses is:

S337
S338/339
S373 - 375

in that order ...

any travel claim under S373 is dependent upon domicle not ordinary residence and applies ONLY if claims under S337 or S338/339 fail.

I will revise my example as folllows:

Compare this example - I live in my own home, with my wife and the dog, in Chester and I am out of work - I decide to seek my fortune and go to London. I enter into a 4 week lease on a flat - I go to an agency and towards the end of the four weeks I am offered a 12 month contract in London - I need an Umbrella so I go to .. Contractor Umbrella. I expect this to be the first of a series of temporary contracts all over the country so there is no doubt that the first assignment is temporary - I therefore rent the London flat for another 12 months - I assume we all agree that the flat in London is allowable - subsistence if applicable - plus travel Chester to London and London to client.

Contrast with this example - I live in my own home, with my wife and the dog, in Paris etc etc

You refer to S339(5) - that is the 24 month/one workplace rule - I specifically discounted that by the comment in my example "I expect this to be the first of a series of temporary contracts all over the country" - therefore S339(5) doesn't apply - in my example - if it applies in practise then the claim fails....
Bob

[meridian]

It's a well constructed argument Bob, but it misses the point that those sections apply to employees. Your argument puts the employment contract before the renting of the second house - in this instance, the "friend" is not an employee of any company, has rented a house before any contract, and the house (and location) are not dependant on employment.

The friend is not being sent here in the capacity of an employee, and therefore fails the "temporary employment" test of S339(5) (notes)

However, as the friend does not appear to be ordinarily resident, once s/he gains a contract s/he may get relief for travel between the UK and their overseas home (S373).

[xchaotic]

Don't know if it helps but I'll describe my situation.
Like many sane people I do try to stay out of London as much as possible and here for the money mostly. I only rent here because I have a contract here.
Therefore I put the rent as my expense, before I started renting, I was staying in hotels and I put that in as well.
Renting a small flat rather than staying in hotels is cheaper and is a simple business decision.
However going back home for the weekend is not something that I would call a business activity, arguably you could still claim it but personally I only did so if it coincided with other business travel.
In my case it's easy to justify as I have subcontractors doing work for me abroad.

My accountant feels it's ok, but as this is a recent development, I've yet to see if Hector agrees.

[nfoote]

Some sort of umbrella?

When I first came to the UK to look for work I had all sorts of companies ringing me saying if I got a contract job then they could do a similar thing to umbrella companies in that I would be employed by them and "sent" to work for the contract client.

In this way it would be as if this umbrella-like company had actually brought me out from my home country on secondment specifically for this contract and I could claim as expenses ALL living and subsistance AND flights to and from my home country including the original flight over before I'd even heard this company!

Anyone heard of this type of scheme? I ended up making the mistake of going perm so didn't/couldn't follow up on this. This was early 2009.

[LisaContractorUmbrella]

Hi Bob Good point. I must admit I was not sure from the OP whether or not the friend had a home abroad that he would be financially maintaining whilst working in the UK - perhaps chrisl could clarify for us.

[Bob Jones]

I don't want to throw a spanner in the works but it appears that the person concerned may have a residence abroad - the person posing the question refers to a second residence viz:

My understanding was that you can claim a second house

Compare this example - I live in my own home, with my wife and the dog, in Chester and I am out of work - I go to an agency and am offered a 12 month contract in London - I need an Umbrella so I go to .. Contractor Umbrella. I expect this to be the first of a series of temporary contracts all over the country so there is no doubt that the first assignment is temporary - I find a flat in London and take it on a 12 month lease - I assume we all agree that the flat in London is allowable - subsistence if applicable - plus travel Chester to London and London to client.

Contrast with this example - I live in my own home, with my wife and the dog, in Paris etc etc

The examples are exactly the same apart from the location of home - travel home to temporary workplace is allowable - I know of no legislation that restricts "home" to the home in the UK.

In the case of a non resident working in the UK there are three possible claims to travelling (all ITEPA) viz

S337
S338/339
S373 to 375

Claims are considered in the order as above and I cannot see any reason why, provided the home in the UK is not the only home, the claim would not succeed under S338/339.

Bob

[Sally BFCA]

HMR&C would not accept the rental costs as an expense as they are not wholly caused by and entirely attributable to the performance of duties. Your friend chose to come to the UK to look for work; had he been relocated by an employer it would have been a different matter; in my opinion this would not be allowable.

I agree totally with Lisa.

[Lumiere]

claim from where ?

we can only guess which scheme he operates

generally speaking, I would assume it will be perfectly OK to claim this from his Maltese Ltd if he has one

[LisaContractorUmbrella]

HMR&C would not accept the rental costs as an expense as they are not wholly caused by and entirely attributable to the performance of duties. Your friend chose to come to the UK to look for work; had he been relocated by an employer it would have been a different matter; in my opinion this would not be allowable.

[chrisl]

A friend of mine has come over from abroad where he lives to find a contract in London for a while.
The question is can he claim the house he is renting as an expense.

My understanding was that you can claim a second house if it specifically relates to your work or because your client sent you to a location miles away. Although in this case he came to the UK first to look for work, he didnt get sent here so in thery this is now currently the main place where he is residing.

He is living in the house in the UK out of choice more than because thats where his client sent him.

What are you views and what do HMRC say, i cant find anything set in stone for this?