Reply to: Expenses Via Limited Co - Simple (I Hope) Question

[markskinnerconsulting]

Business trips, holidays and deductible expenses!

Are you really? Or are you going on holiday and you're trying to expense the rest.

Ohhh you're on to me thanks for your help and advice. I can see there's no pulling the wool over your eyes!

[Sockpuppet]

I can't see anything wrong with filling up on the company credit card. Take the example where I do 100 car miles and then put £45 worth of fuel (45p/mile) on the company card. The company has re-reimbursed my expenses. If I only put £20 worth of fuel in then they pay me the balance of £25 that I'm owed. simples.

Even if you routinely fill up using the company card when you can't account for the business miles you could just put the cost down as a director's loan or offset it against other expenses the company owes you so it's no problem.

As far as I can see, the BIK problem would only arise if the company actually gave you fuel for free and you put it down in your accounts as such which I agree would be a bad idea.

The company is proving you with fuel though - just because you don't see anything wrong with it doesn't mean that it's ok.

What you're getting into is complex and prone to problems. You'd still have to keep a record of mileage to justify the amounts you're paying yourself and fuel is only one element of that mileage amount. Effectively what you're doing is getting your company to provide services for instead of payment.

I do hope your P11D reflect this otherwise I wouldn't want to be on you an inspection day.

Also I do hope you're not claiming the VAT off the fuel otherwise you are also going to gain their displeasure. The 45p includes around 18p (Depending on fuel and car) to cover the fuel. You can claim the VAT from this quite legally. Claiming the VAT on the whole amount will include wear and tear element. This you cannot claim VAT from. Over claiming VAT is probably the quickest way to a hefty fine.

So as your mixing up mileage amounts and providing fuel instead of money (and doing it wrong) you should be declaring these amounts on your P11D and paying the appropriate tax.

There is no good reason to operate as you're doing. Keep yourself and your company separate.

I agree the logic of I'm owed £45 in mileage rate why can't the company give me £45 of fuel looks ok in principle but its not. It's far easier to transfer the cash then you don't get caught up in supplying products and services to employees that'll need explaining to hector (or land you with a large VAT bill if you've been claiming that).

To answer

My wife and I are going to the west coast of the states for 2 weeks next March/April for various meetings etc

Are you really? Or are you going on holiday and you're trying to expense the rest.

You can claim for this if a) you fly out for business only. b) You keep a good record of who you say and e-mails to confirm this. c) don't stay over and tag a holiday on the end.

The phase if "wholly and exclusively for the use of the business". Unless your wife is a fee earner there is no reason for her to come, even duties as company secretary don't extend to travelling to the US.

[markskinnerconsulting]

Business travel abroad and expenses

I can't see anything wrong with filling up on the company credit card. Take the example where I do 100 car miles and then put £45 worth of fuel (45p/mile) on the company card. The company has re-reimbursed my expenses. If I only put £20 worth of fuel in then they pay me the balance of £25 that I'm owed. simples.

Even if you routinely fill up using the company card when you can't account for the business miles you could just put the cost down as a director's loan or offset it against other expenses the company owes you so it's no problem.

As far as I can see, the BIK problem would only arise if the company actually gave you fuel for free and you put it down in your accounts as such which I agree would be a bad idea.

Thanks for posting, Wanderer.

Also, I was wondering if anyone had any thoughts about travel abroad. My wife and I are going to the west coast of the states for 2 weeks next March/April for various meetings etc and I was wondering if I could submit these as tax deductible expenses?

Any suggestions/advice would be greatly appreciated as always!

Thanks and best wishes,

Mark

[Wanderer]

If you pay for personal fuel on company credit card you'll end up paying company car tax.

I can't see anything wrong with filling up on the company credit card. Take the example where I do 100 car miles and then put £45 worth of fuel (45p/mile) on the company card. The company has re-reimbursed my expenses. If I only put £20 worth of fuel in then they pay me the balance of £25 that I'm owed. simples.

Even if you routinely fill up using the company card when you can't account for the business miles you could just put the cost down as a director's loan or offset it against other expenses the company owes you so it's no problem.

As far as I can see, the BIK problem would only arise if the company actually gave you fuel for free and you put it down in your accounts as such which I agree would be a bad idea.

[markskinnerconsulting]

Mileage rate personally. If you pay for personal fuel on company credit card you'll end up paying company car tax.

So still invoice 12p per mile to agy just claim 45p from your company.

Thanks, Sockpuppet! Really appreciate your advice - will keep fuel off the company credit card

[Sockpuppet]

Hi Sockpuppet - not sure if my last post got through ok. Thanks very much for your help! Just in case my last post does eventually get through i'll keep it brief - do you think I should pay for fuel on company credit card or keep fuel separate, pay for it personally and invoice my agency 12p/mile and my ltd company 45p/mile?

Mileage rate personally. If you pay for personal fuel on company credit card you'll end up paying company car tax.

So still invoice 12p per mile to agy just claim 45p from your company.

[markskinnerconsulting]

COMPANY ACCOUNT!

Don't ever ever ever ever ever get any money paid into your personal account by an agency. That'd be like hector's (read: HMRC) wet dream.


You won't push up your corp tax as say you pay out £1000 of expenses. You claim this £1000 from the agency. They pay you and you either:

a) Have paid for all the expenses on a Company Credit Card. or
b) Paid for yourself for which you've put in an expense form for £1000.

So to recap. £1000 in, £1000 out. No increase in profit or corp tax.

Hi Sockpuppet - not sure if my last post got through ok. Thanks very much for your help! Just in case my last post does eventually get through i'll keep it brief - do you think I should pay for fuel on company credit card or keep fuel separate, pay for it personally and invoice my agency 12p/mile and my ltd company 45p/mile?

Thanks,

Mark

[markskinnerconsulting]

Just a minute. Travelling to and from where? From home to site? If so these expenses are yours, nothing to do with the agency.

Hi Stek, thanks for posting. I should clarify - I'll be contracting as a ltd company and invoicing an agency who will be invoicing the company i'll be working for. I'm allowed to claim for mileage from home to various hospitals I'll be travelling to as I work from home which is also my business address.

Cheers,

Mark

[markskinnerconsulting]

COMPANY ACCOUNT!

Don't ever ever ever ever ever get any money paid into your personal account by an agency. That'd be like hector's (read: HMRC) wet dream.


You won't push up your corp tax as say you pay out £1000 of expenses. You claim this £1000 from the agency. They pay you and you either:

a) Have paid for all the expenses on a Company Credit Card. or
b) Paid for yourself for which you've put in an expense form for £1000.

So to recap. £1000 in, £1000 out. No increase in profit or corp tax.

Thanks, Sockpuppet, I really appreciate your help

One more question (for today...sure i'll think of more later!) do you think I should pay for fuel on my company commercial (credit) card or should I keep fuel separate and pay for fuel out of personal money and then claim the 12p a mile from the agency and then invoice my ltd company for 45p a mile?

Not sure what would work best. I plan to keep all my fuel receipts just in case anyway but just want things to be as easy and tax/money efficient as possible.

Thanks again,

Mark

[stek]

Hi, just saw this and really interested as I've just started contracting (2 weeks ago) and I have a follow up question:

I'll be invoicing my agency twice a month at the end of every month - one for my day rate and another separate invoice for expenses e.g. travelling each month, hotels etc. Should I have my expenses paid into my company account as well as my day rate or should I have expenses paid into my personal account? Am I right in thinking that I'll be pushing my corporation tax if my expenses reimbursed by my agency are paid into my business bank account?

Thanks in advance for your help!

Mark

Just a minute. Travelling to and from where? From home to site? If so these expenses are yours, nothing to do with the agency.

[Sockpuppet]

Hi, just saw this and really interested as I've just started contracting (2 weeks ago) and I have a follow up question:

I'll be invoicing my agency twice a month at the end of every month - one for my day rate and another separate invoice for expenses e.g. travelling each month, hotels etc. Should I have my expenses paid into my company account as well as my day rate or should I have expenses paid into my personal account? Am I right in thinking that I'll be pushing my corporation tax if my expenses reimbursed by my agency are paid into my business bank account?

Thanks in advance for your help!

Mark

COMPANY ACCOUNT!

Don't ever ever ever ever ever get any money paid into your personal account by an agency. That'd be like hector's (read: HMRC) wet dream.


You won't push up your corp tax as say you pay out £1000 of expenses. You claim this £1000 from the agency. They pay you and you either:

a) Have paid for all the expenses on a Company Credit Card. or
b) Paid for yourself for which you've put in an expense form for £1000.

So to recap. £1000 in, £1000 out. No increase in profit or corp tax.

[markskinnerconsulting]

Question re: expenses

Kingcook has got it right.

(1) Yes, claim your mileage allowance via your agency, which will be a little extra income for your business;
(2) Also submit an expense claim to your business at 45p per mile travelled. Don't get reimbursed for fuel and don't get the company to pay for the fuel. The idea is the 45p mileage allowance you can claim will cover your business motoring fuel costs, and other associated vehicle running costs (like wear and tear, maintenance, insurance etc). If you travel over 10,000 in the tax year, the mileage allowance you can claim drops to 25p per mile.

Hi, just saw this and really interested as I've just started contracting (2 weeks ago) and I have a follow up question:

I'll be invoicing my agency twice a month at the end of every month - one for my day rate and another separate invoice for expenses e.g. travelling each month, hotels etc. Should I have my expenses paid into my company account as well as my day rate or should I have expenses paid into my personal account? Am I right in thinking that I'll be pushing my corporation tax if my expenses reimbursed by my agency are paid into my business bank account?

Thanks in advance for your help!

Mark

[northernladuk]

Hey, its gone up to 45p this year. Didn't know that!

Is that because you are too busy trying to get yourself a few Russian brides and set up divi payments for them?

[xoggoth]

Hey, its gone up to 45p this year. Didn't know that!

[RealPolitik]

Thanks for the prompt responses, that makes perfect sense.