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Commuting to UK (re. expenses & accom)

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    Commuting to UK (re. expenses & accom)

    First post - hope I make sense!

    Right, I've been contracting in the UK for the last 2 years for the same company, operating via an umbrella 'employer' and claiming both weekly airfares to- and weekly hotels in London. Now that I'm coming to the end of the 2-year IR35 cutoff, how would you suggest I best continue contracting (for the same company - they like me, thankfully!) while still being able to claim the substantial travel & accommodation expenses (around £3000 pm) ?

    From a UK taxation point-of-view, I live in Dublin, Ireland - that's the only address they have for me - and it is indeed my home - I do not, nor intend to, own a place in London or elsewhere in the UK.
    Will I fall foul of the IR35 24-month rule re. temporary workplaces or are there legal entities (self-employment, limited co) that would make the process easier, while remaining above board at all times ?

    regards, -heebe.

    #2
    Originally posted by heebejeebe View Post
    First post - hope I make sense!

    Right, I've been contracting in the UK for the last 2 years for the same company, operating via an umbrella 'employer' and claiming both weekly airfares to- and weekly hotels in London. Now that I'm coming to the end of the 2-year IR35 cutoff, how would you suggest I best continue contracting (for the same company - they like me, thankfully!) while still being able to claim the substantial travel & accommodation expenses (around £3000 pm) ?

    From a UK taxation point-of-view, I live in Dublin, Ireland - that's the only address they have for me - and it is indeed my home - I do not, nor intend to, own a place in London or elsewhere in the UK.
    Will I fall foul of the IR35 24-month rule re. temporary workplaces or are there legal entities (self-employment, limited co) that would make the process easier, while remaining above board at all times ?

    regards, -heebe.
    The 24 month rule is nothing to do with IR35. Its UK tax law. Given you have no UK address its questionable whether any of the claims are entirely legitimate (in the UK), you are in effect doing it by choice. I assume you have taken advice from somebody other than your umbrella though and they have said they believe it is OK.

    I would anticipate that the UK regard you as resident in the UK but non dom and would only be seeking to tax you on your UK income.

    I would also imagine that the Irish authorities would seek to tax you on your worldwide income since you are also tax resident there (it is entirely possibly to be resident in many different jurisdictions). This doesn't necessarily mean you will actually be taxed in Eire, this will depend on the overall provisions of the UK-Ireland treaty. I believe that under the DTA you will be assessed on this income in Ireland and allowed a credit of upto the amount of UK tax paid (i.e. i believe this dta works on a credit basis rather than a taxing rights basis).

    So, if you are in fact assessed on this income in Ireland the question then becomes how to the Irish authorities see the expenses, are they claimable against the income? (from the Irish POV)

    Given it has been > 6 months the Irish authorities may be of the opinion that the expenses you have already claimed are not allowable anyway.

    Comment


      #3
      Just to add to this, ignoring the problems mentioned above for a moment. With regard to the 24 month rule you should have stopped cliaming subsitence under the 24 month rule from the day you knew you would be at the contract over 24 months.

      If you had a 3 month and then 12 month contract you can claim. If they offer you 12 months again you cannot claim at all. You could only claim from 15 months of that 27 month in total contract.
      'CUK forum personality of 2011 - Winner - Yes really!!!!

      Comment


        #4
        The 24 month rule is determined by location - same location for 24 months and travel and accommodation are no longer allowable - changing umbrella or setting up Ltd Co will not change that
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        Comment


          #5
          Originally posted by heebejeebe View Post
          contracting in the UK for the last 2 years for the same company, operating via an umbrella 'employer' and claiming both weekly airfares to- and weekly hotels in London. Now that I'm coming to the end of the 2-year IR35 cutoff, how would you suggest I best continue contracting (for the same company - they like me, thankfully!) while still being able to claim the substantial travel & accommodation expenses (around £3000 pm) ?
          How many nights a year do you spend in the UK? Is it possible to switch to an Irish umbrella, become non tax resident in the UK and pay tax under Irish law so you can continue to claim the expenses? As your expenses are substantial then I would suggest that you get some professional advice on this one. You also need to be clear about which country you are resident in for tax purposes so you don't get them trying to double tax you.

          If you can trade outside IR35 then it's probably worth switching to a LTD company as you can probably avoid a substantial amount of tax though it won't reset the 2 year timer.

          The other thing to consider is asking if you can work from home week on/week off to reduce your expenses.
          Free advice and opinions - refunds are available if you are not 100% satisfied.

          Comment


            #6
            Originally posted by Wanderer View Post
            How many nights a year do you spend in the UK? Is it possible to switch to an Irish umbrella, become non tax resident in the UK and pay tax under Irish law so you can continue to claim the expenses? As your expenses are substantial then I would suggest that you get some professional advice on this one. You also need to be clear about which country you are resident in for tax purposes so you don't get them trying to double tax you.

            If you can trade outside IR35 then it's probably worth switching to a LTD company as you can probably avoid a substantial amount of tax though it won't reset the 2 year timer.

            The other thing to consider is asking if you can work from home week on/week off to reduce your expenses.
            Switching to an Irish brolly would not affect whether or not the OP is tax resident in the UK, this is a matter fact based on the time he spends here. It makes no difference who the employer is. However the suggestion could potentially be beneficial because if the Irish employer does not have a permanent presence here then no employers NI would be due. However there is difficulty with this because the OP is working here "for" a UK employer rather than on the brollys business so HMRC may view ER's NI as still payable. It may be worth the OP considering using the reciprocal social security arrangement and continuing to pay social security contributions in Ireland.

            There will be double taxation. The OP is resident but not ordinarily resident in the UK from their description. They are also both resident and domiciled in Ireland, though this doesn't of itself necessarily mean the income will be assessed at anything other than a zero rate.

            A likely problem with switching to a UK ltd is that the residency issue doesn't go away. The Irish authorities may also regard the UK company as resident in Ireland and seek to tax it. Though again this won't necessarily increase the tax bill.

            Comment


              #7
              Average expenses for last year per month

              Ask Client to reduce your rate by above amount, ask client to pay your expenses as part of there contract with you.

              sorted

              Comment


                #8
                Originally posted by ASB View Post
                Switching to an Irish brolly would not affect whether or not the OP is tax resident in the UK, this is a matter fact based on the time he spends here.
                Yes, that is absolutely right. But if you divide your time between two countries then with a bit of careful planning you may be able to change which country you are tax resident in...
                Free advice and opinions - refunds are available if you are not 100% satisfied.

                Comment


                  #9
                  Originally posted by Wanderer View Post
                  Yes, that is absolutely right. But if you divide your time between two countries then with a bit of careful planning you may be able to change which country you are tax resident in...
                  Agreed. The op could probably quite easily become non resident in the uk. 4 midnights per week for 45 weeks. But he could also get caught by the 90 day average.

                  Comment


                    #10
                    Travel expenses from european resident to UK Contract

                    [QUOTE=ASB;1382098]The 24 month rule is nothing to do with IR35. Its UK tax law. Given you have no UK address its questionable whether any of the claims are entirely legitimate (in the UK), you are in effect doing it by choice. I assume you have taken advice from somebody other than your umbrella though and they have said they believe it is OK.

                    I am currently claiming from Brussels to London each week and have done so on past contracts in the UK. The rule seems to state that you can claim from your home to your place of work up to 24 months. European Law states that I have the same rights as UK workers so I can claim from my home to my place of work

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