Client paying expenses when 2 year rule in force

[zoomfwd]

Hypothetical question at this point and will ask my accountant if it is likely to become more than that.
So, in the meantime, how would you manage the following

New contract but in the same location as previous contract and so 24 month rule applies.
The client will pay travel expenses (train, hotels etc) upon receipt of invoice for actual cost (net of vat) with accompanying receipts

Given I can’t personally claim the expenses how would you manage this ?

Note there isn’t an option to increase the rate to cover the expenses


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[northernladuk]

Hypothetical question at this point and will ask my accountant if it is likely to become more than that.
So, in the meantime, how would you manage the following

New contract but in the same location as previous contract and so 24 month rule applies.
The client will pay travel expenses (train, hotels etc) upon receipt of invoice for actual cost (net of vat) with accompanying receipts

Given I can’t personally claim the expenses how would you manage this ?

Note there isn’t an option to increase the rate to cover the expenses

Where are these expenses to and from? You can't claim expenses for travelling to your clients place of work as it has now become permanent as per the rules. This doesn't mean you can't claim for temporary travel to other places. If the client wants you to go to another site that isn't your new permanent location you can still claim.

Could you clarify what these journeys are that you'll be invoicing for.

[zoomfwd]

The expenses are travelling to the clients normal place of work

I know I can’t claim personally but if the client is happy to pay MyCo for them then would be a shame not to invoice them [emoji3]




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[ladymuck]

Then put the cost through your LtdCo directly rather than paying personally and reclaiming? I do wonder why people don't keep personal and business expenditure separate. It's not hard to get debit card on the business current account or a credit/charge card.

Check with your accountant re using a different account to code it to so they know these costs are not allowable for CT relief.

[malvolio]

Ermm...

Don't forget that the point is that work expenses, no matter how paid, are no longer eligible for tax relief. so if you get £200 a week for a hotel, or £30 for petrol, that is effectively personal earned income and liable fo tax at your marginal rate. Even if you don't spend it.

However, if you have it as part of your charges to your client - i.e. YourCo is invoicing for work done plus expenses - then that is company income and so, obviously, you aren't liable for it. But you can't then expense YourCo if you pay using your own money, you can only take it as salary (or to be precise, an earned bonus).

Also, as has been said, this is your normal workplace - anywhere else at the client's request is claimable as usual.

[northernladuk]

The expenses are travelling to the clients normal place of work

I know I can’t claim personally but if the client is happy to pay MyCo for them then would be a shame not to invoice them [emoji3]

Your client is going to pay your mileage and hotels just for turning up on site? Blimey, pulled a blinder there. So it just goes in to your company as income and you get it out the same way you get all the other income out.

[TheCyclingProgrammer]

Then put the cost through your LtdCo directly rather than paying personally and reclaiming? I do wonder why people don't keep personal and business expenditure separate. It's not hard to get debit card on the business current account or a credit/charge card.

It makes zero difference to the tax treatment if you pay directly or expense claim them. If you're caught by the 24 month rule, then if YourCo pays for your travel costs (directly or otherwise) it's a taxable BIK.

OP - if you're client is willing to reimburse you for your expenses then it's simple, you just invoice them. You won't be able to repay yourself these costs as a normal tax-free expense due to the 24 hour rule but you can pay them out as an extra dividend (subject to extra tax) or simply treat it as additional profit and leave it in the company.

[TheCyclingProgrammer]

you can only take it as salary (or to be precise, an earned bonus).

Or as dividends, having paid corporation tax on the additional income.

[zoomfwd]

It makes zero difference to the tax treatment if you pay directly or expense claim them. If you're caught by the 24 month rule, then if YourCo pays for your travel costs (directly or otherwise) it's a taxable BIK.

OP - if you're client is willing to reimburse you for your expenses then it's simple, you just invoice them. You won't be able to repay yourself these costs as a normal tax-free expense due to the 24 hour rule but you can pay them out as an extra dividend (subject to extra tax) or simply treat it as additional profit and leave it in the company.

Would I then need to declare the the total amount as a BIK on my self assessment and pay income tax on that at my marginal rate ?


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[northernladuk]

Would I then need to declare the the total amount as a BIK on my self assessment and pay income tax on that at my marginal rate ?


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At this point you would speak to your accountant.