Reply to: Clients Offering Subsistence Allowance

[WTFH]

Seems an overly complicated thread this one.

Indeed.

Both covbob and I found the thread very inneresting. And because it’s so inneresting, I’m going to move it to general and then close it.

[TheCyclingProgrammer]

Which was your advice in post 2

Seems an overly complicated thread this one.

Indeed.

[northernladuk]

If inside IR35 then yes, subject to PAYE. If outside then it’s just company income and you’d be able to extract the money tax free as an expense payment subject to thenusual rules on travel and subsistence.

Which was your advice in post 2

Seems an overly complicated thread this one.

[TheCyclingProgrammer]

If inside IR35 then yes, subject to PAYE. If outside then it’s just company income and you’d be able to extract the money tax free as an expense payment subject to thenusual rules on travel and subsistence.

[Evanses Elevenses]

The client has offered to pay an extra amount per day to cover expenses. It’s not a BIK, it’s a rate increase.

And is subject to PAYE I guess.

I have done a couple of roles in the past where the accommodation (and flights) were provided (and paid for) by the client. Wonder if the taxman will be interested in these kind of arrangements if caught within IR35. Would they even have any way of knowing?

All hypothetical really but I can see this becoming a more widely adopted model moving forward & I'll bet HMRC will have it in their sights once they're aware.

[Hobosapien]

What if the end client provides a company Audi to you personally full time. Is there a BIK then?

Nope. Same as if they offered you a rental car. How they pay for the vehicle is irrelevant to you as you are not an employee of theirs unless you are on their PAYE.

Otherwise when you get a courtesy car from a dealer while yours is in for repair would be a BIK.

[WTFH]

Clients Offering Subsistence Allowance

A BIK is something that you can benefit from outside of work. As such, a “staying away from home while you are WORKING payment” is not a benefit, nor is it a BIK

[TheCyclingProgrammer]

If inside IR35 there must be a BIK. It is provided through your employment regardless of who pays for it.

The client has offered to pay an extra amount per day to cover expenses. It’s not a BIK, it’s a rate increase.

[Old Greg]

BIK is for employees and accounted for via PAYE and the P11D submitted for each employee each tax year.

So anything paid for externally by client is nothing to do with BIK as they are not the actual employer only a 'disguised employer' . The real employer is the one you are on PAYE with which is likely your own Ltd or a brolly.

My accountant sends me a questionnaire to fill in so they can complete the P11D accurately. It only asks for expenses and things paid for by the company that me as an employee may have received that HMRC would class as a BIK. Anything else is out of scope.

What if the end client provides a company Audi to you personally full time. Is there a BIK then?

[Old Greg]

A BIK is when you don't actually get any money. That's what 'in kind' means.

If they paid for your accommodation that could be a benefit in kind, depending on the details. I don't think that's what you're saying but it does introduce an interesting hypothetical.

If they pay for it, it's not available at weekends, and it's a temporary place of work, then it's not a BIK.
If you're inside IR35 you can't claim expenses to pay for your own accommodation without it being a BIK. If the client paid, would it still be a BIK? I'm not sure. Even if you're inside it could still be a temporary place of work. IR35 stops you claiming the expense from your own company, but shouldn't affect your claims from your 'employer'. Or would it?
I don't know.
Not helpful for the OP, and slightly academic, but does anyone have any ideas?

If inside IR35 there must be a BIK. It is provided through your employment regardless of who pays for it.

[Hobosapien]

Not helpful for the OP, and slightly academic, but does anyone have any ideas?

BIK is for employees and accounted for via PAYE and the P11D submitted for each employee each tax year.

So anything paid for externally by client is nothing to do with BIK as they are not the actual employer only a 'disguised employer' . The real employer is the one you are on PAYE with which is likely your own Ltd or a brolly.

My accountant sends me a questionnaire to fill in so they can complete the P11D accurately. It only asks for expenses and things paid for by the company that me as an employee may have received that HMRC would class as a BIK. Anything else is out of scope.

[LondonManc]

I've noticed a couple of public sector roles (presumably inside IR35) that are offering £X on top of the day rate for accommodation costs.


My question is, would this be seen as a BIK? And would the same be true in instances when the a=client actually pays for or provides the accommodation?


I only ask because I think this is something that is going to be more commonplace from June 2020.

No; if you can set this up as a definite rate and charge with them, or commit them to booking a hotel near client co on your behalf, it's nothing more than the same business expense that you'd have as a permie - working away was anything but a BIK!!!!

[Lance]

I've noticed a couple of public sector roles (presumably inside IR35) that are offering £X on top of the day rate for accommodation costs.


My question is, would this be seen as a BIK? And would the same be true in instances when the a=client actually pays for or provides the accommodation?


I only ask because I think this is something that is going to be more commonplace from June 2020.

A BIK is when you don't actually get any money. That's what 'in kind' means.

If they paid for your accommodation that could be a benefit in kind, depending on the details. I don't think that's what you're saying but it does introduce an interesting hypothetical.

If they pay for it, it's not available at weekends, and it's a temporary place of work, then it's not a BIK.
If you're inside IR35 you can't claim expenses to pay for your own accommodation without it being a BIK. If the client paid, would it still be a BIK? I'm not sure. Even if you're inside it could still be a temporary place of work. IR35 stops you claiming the expense from your own company, but shouldn't affect your claims from your 'employer'. Or would it?
I don't know.
Not helpful for the OP, and slightly academic, but does anyone have any ideas?

[Hobosapien]

I see this as just the same as when a client sorts out accommodation for visitors as part of some ongoing business relationship.

The client will likely have negotiated a discount with local hotels/guest houses so can save money by arranging it all themselves rather than having to pay x amount on top of any other costs being charged to them.

So maybe we will see more clients offering this as a sweetener when they deem the contract inside IR35, alongside the current frequent requirement of requiring the contractor to be locally available. i.e. live locally or willing to relocate either during the week or for the length of the contract.

The more remote clients will already be onto this to attract and welcome business related visitors.

Where the option exists to not incur the cost at all I'd prefer to keep it simple by avoiding anything that could be seen as expenses that are increasingly being scrutinised and disallowed by HMRC.

[TheCyclingProgrammer]

It's not a BIK, they aren't your employer. Regardless of IR35 status, it's just an additional amount that you are invoicing them on top of your day rate. If it's inside IR35 then it's all treated the same in terms of tax and how you have to pay yourself anyway.