Contractors' Questions: Any expenses if I work in the UK but live abroad?

Contractor’s Question: What expenses -- travel or otherwise -- can I claim if I live in South Africa in a permanent abode with my wife and children but fly to the UK where I work via a limited company, renting accommodation near my client’s premises?

Although I will return to SA every six months or so, once the contract is over I want to be with my family and have no plan to live in the UK, despite my dual citizenship. What would happen from a tax standpoint? Many attempts to get clarity from HMRC have been fruitless.

Expert’s Answer: The key to claiming expenses is that they need to be genuinely for business purposes. As a result, the taxman could argue that your flight back to South Africa to visit your family is not for business purposes, so it is not a claimable expense. On the other hand, if you are traveling to South Africa for business meetings then it would be recognised as a business expense.

Then again, looking at the flight from South Africa to the UK, you could argue it’s always for business purposes because you are working in the UK and so it should therefore be claimable.

To be able to claim subsistence expenses, you have to show that there is no Supervision, Direction or Control in (or when you’re executing) your contract. The legislation last year made it very difficult for umbrella companies to be able to process subsistence expenses (and it is not a service that we offer any more). If you are running your own limited company, which you are, then the answer is that it depends on your contract and the reality of the way you work as to whether you can claim subsistence as an expense or not.

In respect of your intentions once your UK contract is up, if you are leaving the UK permanently there is a P85 form that you can complete which informs the authorities that you are no longer resident in the UK, and so should not have to pay tax. You may have to do a tax return at the end of the tax year depending on when you leave. However, you should not have to pay any tax in the UK if you have not been living and working here for a full tax year. Good luck!

The expert was Charles Daw, a director at 6CATS International, a supplier of compliant contractor management solutions.

Editor’s Note: Related —

Contractors’ Questions: Can I claim travel expenses from my home in France to the UK?

Contractors’ Questions: How to keep my UK clients but live in Italy?

Contractors’ Questions: How to contract abroad from overseas?

Tuesday 30th May 2017