Reply to: hire car expense claiming

[moggy]

An update: the umbrella has reconsidered their interpretation of HMRC's guidelines as my rentals are indeed short, sporadic/occasional and I submit personal mileage reimbursements every week and so they provided tax relief on the missing 2/7s and will provide full tax relief on future rentals of the same nature. They have also acknowledged that they have not be reimbursing me the VAT as previously promised and will be reconciling that as well. So I think I'm no longer out of pocket.

I've learned a fair bit along the way and used it to create a spreadsheet where I can calculate the employer's and employee's NI as well as the PAYE due in order to check that I'm not out of pocket.

Thanks for all the help and special thanks go to Lisa for her help here, via PMs and via emails. She really went above and beyond the call of duty for me. Thank you.

After all this i assume you will signing with Contractor Umbrella? after all Lisa corrected your present umbrellas mistake.. I wouldn't be staying put..

[LisaContractorUmbrella]

There's a reference to 45 days here: http://www.hmrc.gov.uk/briefs/company-tax/bim47700.pdf under BM47750 but I believe this applies to businesses and not to an employee working through an umbrella company

[pespro]

Sorry to tag on to the end of this thread. I have a question regarding car hire expenses for a future role.

I will be hiring a car. The options i was explained was to either claim the costs back of hire and get a reduced rate of mileage. I thought it was 25p but looks like 18p. Or claim 45p per mile and not claim the car hire costs.

The first problem is the client is going to be paying mileage between sites at around 60p per mile. I asked regarding claiming for this and then for travel from sites to my home at the reduced rate and was told its ok and not to worry about this.

In my eyes it looks like the client will be paying me mileage for some journeys and i would get tax relief on the journey to and from work by claming the mileage via the umbrella. Is that how it works and is all legal?

I then asked do i only get 20% back of the hire costs as this is VAT so if the hire cost per week was £100 i would only be able to put £20 to my allowance to pay less tax. I was told no, its the full amount divided by 7 and multipled by 5 to get the 5 out of 7 rule which was linked earlier on this thead. So £71 per week?

Finally i have seen in this thread about the 45 day rule. I cant find anything with google on this. The hire company say they do a 28 day lease, then the car has to return and then is sent out again. Does this mean i am ok with this. Effectively hiring a car for 28 days at a time...

[LisaContractorUmbrella]

Glad it all got sorted Arby - thanks for your kind words

[MPwannadecentincome]

An update: the umbrella has reconsidered their interpretation of HMRC's guidelines as my rentals are indeed short, sporadic/occasional and I submit personal mileage reimbursements every week and so they provided tax relief on the missing 2/7s and will provide full tax relief on future rentals of the same nature. They have also acknowledged that they have not be reimbursing me the VAT as previously promised and will be reconciling that as well. So I think I'm no longer out of pocket.

I've learned a fair bit along the way and used it to create a spreadsheet where I can calculate the employer's and employee's NI as well as the PAYE due in order to check that I'm not out of pocket.

Thanks for all the help and special thanks go to Lisa for her help here, via PMs and via emails. She really went above and beyond the call of duty for me. Thank you.

Awww shuck nice to see a happy outcome! Merry Xmas!

[arby]

An update: the umbrella has reconsidered their interpretation of HMRC's guidelines as my rentals are indeed short, sporadic/occasional and I submit personal mileage reimbursements every week and so they provided tax relief on the missing 2/7s and will provide full tax relief on future rentals of the same nature. They have also acknowledged that they have not be reimbursing me the VAT as previously promised and will be reconciling that as well. So I think I'm no longer out of pocket.

I've learned a fair bit along the way and used it to create a spreadsheet where I can calculate the employer's and employee's NI as well as the PAYE due in order to check that I'm not out of pocket.

Thanks for all the help and special thanks go to Lisa for her help here, via PMs and via emails. She really went above and beyond the call of duty for me. Thank you.

[arby]

PM sent.

[LisaContractorUmbrella]

What do you think I'm losing out on - recovering the VAT or the NI or both?

Well you are paying tax and NI on the amount that's been paid by the agency (the expense value less VAT) as it's being treated like salary and then you are only getting tax relief on the value of the expense when it is paid as a non-chargeable expense through the umbrella company. I did some rough calculations for you in a previous post - take a look at those - if you're still concerned PM me the figures on your payslip and I'll have a more detailed look for you

[arby]

I am still not quite sure how all this is working Arby and I think you may still be losing out as I cannot see how the full value can be 'reimbursed' to you - I think that you will only be receiving tax relief on the full value.

What do you think I'm losing out on - recovering the VAT or the NI or both?

[LisaContractorUmbrella]

Yes.

I am still not quite sure how all this is working Arby and I think you may still be losing out as I cannot see how the full value can be 'reimbursed' to you - I think that you will only be receiving tax relief on the full value.

[arby]

If that's the case then the umbrella company will be claiming the VAT element of the expenses through their VAT return so I would imagine that they are processing the full value of the expense i.e. including VAT to you??

Yes.

[LisaContractorUmbrella]

I provide copies of the VAT receipts to the umbrella company as part of my claim.

If that's the case then the umbrella company will be claiming the VAT element of the expenses through their VAT return so I would imagine that they are processing the full value of the expense i.e. including VAT to you??

[arby]

Did you provide your umbrella company with the receipts or did they go to your client?

I provide copies of the VAT receipts to the umbrella company as part of my claim.

[LisaContractorUmbrella]

I will need to check a previous claim in detail but I was told that the tax and NI deducted were recovered when I claimed tax relief from the umbrella company and that the VAT was also repaid.

Did you provide your umbrella company with the receipts or did they go to your client?

[arby]

I think you may be losing out here - your original outlay was, say, £120.00.
£100 is paid to you on top of your salary and is therefore subject to deductions for tax and NI contributions - for arguments sake £30.00. So you have lost £20.00 as the VAT element of the expense was not paid and then another £30.00 through tax and NI
You then claim tax relief through your umbrella company on the original £120.00 which would be £24.00
Based on these very rough calculations you are losing out to the tune of about £26.00

That is if I have understood correctly.

I will need to check a previous claim in detail but I was told that the tax and NI deducted were recovered when I claimed tax relief from the umbrella company and that the VAT was also repaid.