Roughly what money do you get back when renting accomodation?

[moomoo]

Thanks all!

I am right then to have always thought its my money Im spending on accomodation. I would say some contractors Ive worked with def don't realise that.

I always wonder why when I earn pretty good money (but move around a bit) I end up living in horrible flats.

Anyhow, I just need to think that what ever the rent is I could get roughly 20% discount (I 'live' somewhere else see) meaning if Im happy to spend £480 for a place out of my own money (my Ltd company money is my money) then I could get a place for £600.

re: guy in caravan: Ive actually considered living in a big touring caravan cos I live in a lovely big static between contracts. No camps sites near where Im working at the mo tho - I know cos I looked into it!

[Ignis Fatuus]

Yes, technically correct but I see my company's money as my money because ultimately I am the sole director/shareholder.

Wrong I'm afraid. Some of it is Hector's money.

[SueEllen]

Yes, technically correct but I see my company's money as my money because ultimately I am the sole director/shareholder.

I think the only time to really rip it on company expenses is when you aren't a major shareholder.

The guy living it up may "live" at his parents' home therefore getting his company to pay his rent is a bonus for him.

Remember not everyone is in the same situation.

[Wanderer]

Technically, no it does not come out of YOUR pocket. It comes out of your companies "pocket".

This in turn reduces the amount of money that you can extract from your company into your pocket.

Yes, technically correct but I see my company's money as my money because ultimately I am the sole director/shareholder.

I think the only time to really rip it on company expenses is when you aren't a major shareholder.

[TykeMerc]

Nope.

It comes out of his income before he is taxed.

Or it's subtracted from his gross income then he's taxed on what is left.

To avoid living in sh*tholes I suggest you work out what rate you would like then add the accommodation expense on it for reasonable accommodation. Life is too short to stay in sh*tholes for long...........

Even if you are in London you should be able to find somewhere decent where you can be someone's Monday-Friday lodger for a reasonable amount.

That's how I look at it.

The company pays for my accommodation when I'm on site, that reduces the amount of profit that I can draw on as dividends. It's a cost of doing business just like other business expenses.

[stek]

Having seen the damp cold vermin infested tulipholes that some of my fellow students lived in while at university I do have some standards.

But then again lots of modern students demand higher accommodation standards then I do.

One fellow contractor lived in caravan in field full of horses with a gas heater and a tiny black and white portable telly.

He was from Blackburn though, the caravan was living the high life to him prolly....

For me, living like that would negate the point of contracting, ie a better work/life experience..

[SueEllen]

A man after my own heart. Who cares where you live as long as you are saving money? As others have said, a flat is a valid expense deductable from co profits as alternative to hotel assuming you also have a main home. They might query excessive luxury.

Having seen the damp cold vermin infested tulipholes that some of my fellow students lived in while at university I do have some standards.

But then again lots of modern students demand higher accommodation standards then I do.

[xoggoth]

I cringe having to spend £35 /day

A man after my own heart. Who cares where you live as long as you are saving money? As others have said, a flat is a valid expense deductable from co profits as alternative to hotel assuming you also have a main home. They might query excessive luxury.

[SueEllen]

Either your mate doesn't understand that, or you picked him up wrong.

moomoo is using an umbrella company so is under PAYE.

I have no idea how a Ltd is put under an umbrella company as MSC's have been tax inefficient (not worth doing) for years.

[SueEllen]

Im contracting and working away from home during the week. I have an ltd (managed by umbrella).

If I rent a flat or something then most of that money will come out of my own pocket won't it? Thats what Ive always thought so to maximise my income Ive always ended up living in sh*t holes!

I must be missing something because a fellow contractor is happily spending nearly £100/day on a studio style hotel room - I cringe having to spend £35 /day. He says it comes out of his tax bill, like it costs him nothing, but thats not correct is it?

Nope.

It comes out of his income before he is taxed.

Or it's subtracted from his gross income then he's taxed on what is left.

To avoid living in sh*tholes I suggest you work out what rate you would like then add the accommodation expense on it for reasonable accommodation. Life is too short to stay in sh*tholes for long...........

Even if you are in London you should be able to find somewhere decent where you can be someone's Monday-Friday lodger for a reasonable amount.

[jmo21]

Im contracting and working away from home during the week. I have an ltd (managed by umbrella).

If I rent a flat or something then most of that money will come out of my own pocket won't it? Thats what Ive always thought so to maximise my income Ive always ended up living in sh*t holes!

I must be missing something because a fellow contractor is happily spending nearly £100/day on a studio style hotel room - I cringe having to spend £35 /day. He says it comes out of his tax bill, like it costs him nothing, but thats not correct is it?

Technically, no it does not come out of YOUR pocket.

It comes out of your companies "pocket".

This in turn reduces the amount of money that you can extract from your company into your pocket.

You can save some money by having the company pay for it as an expense, the 20% - 40% "discount"/tax saving mentioned above.

Either your mate doesn't understand that, or you picked him up wrong.

[Wanderer]

I must be missing something because a fellow contractor is happily spending nearly £100/day on a studio style hotel room - I cringe having to spend £35 /day. He says it comes out of his tax bill, like it costs him nothing, but thats not correct is it?

If he wants to spend the money then good for him, but your friend is living in a fools paradise if he thinks he's getting it for "free". If it did come straight out of the tax then we would all be living it large on the tax man, wouldn't we!

Figure out how much tax you pay overall and that is the discount you get on anything you put through on expenses.

[stek]

No, that's not correct.

You don't pay your expenses out of your tax bill.

You pay taxes on your income - expenses.

Which means he's not paying tax on 20% to 40% of the £100.

Or looked at another way, he's getting a 20% to 40% discount on the accomodation.

Perfect explanation.

In my accountancy days I did a bit on the side for self-employeds, the number who spent their tax liability on a car thinking it wiped it out and was a effectively a 'free' car...

[Kanye]

I must be missing something because a fellow contractor is happily spending nearly £100/day on a studio style hotel room - I cringe having to spend £35 /day. He says it comes out of his tax bill, like it costs him nothing, but thats not correct is it?

No, that's not correct.

You don't pay your expenses out of your tax bill.

You pay taxes on your income - expenses.

Which means he's not paying tax on 20% to 40% of the £100.

Or looked at another way, he's getting a 20% to 40% discount on the accomodation.

[moomoo]

Im contracting and working away from home during the week. I have an ltd (managed by umbrella).

If I rent a flat or something then most of that money will come out of my own pocket won't it? Thats what Ive always thought so to maximise my income Ive always ended up living in sh*t holes!

I must be missing something because a fellow contractor is happily spending nearly £100/day on a studio style hotel room - I cringe having to spend £35 /day. He says it comes out of his tax bill, like it costs him nothing, but thats not correct is it?