Most tax-efficient option: living in rented or owned property in London?

[Guest22]

No, I live in my Surrey property. I pay Council Tax there, all the bills are in my name there, all my bank accounts are registered there, every single item of mail I receive goes to my Surrey property.

Before I contracted in London, I lived in Cambridgeshire Monday to Friday (on a contract) and in my Surrey property at weekends. And before this, I was living in my Surrey property continuously for a short period. I returned to London in April to do my first London contract.

Some parts of anywhere are faster than other parts of anywhere to get to anywhere, especially if you're encased in a locked box in a dark underground cellar in the middle of the woods. But, you have to be talking about specific parts of Hampshire and specific parts of Surrey to make the statement that Hampshire is quicker to get to London than Surrey. Typically, Surrey is quicker.

Regarding your comment about openly committing tax evasion, I take that on board because this would echo similar to what the MPs were doing, right? However, there is one other twist to this tale. My London property is specifically a live/work unit. In other words, it is not residential. Therefore, by way of the leasehold on the property, I cannot live there without conducting some sort of business in the property. Would this not add credence to the fact that it is for work only and with my Surrey property being my PPR, I may claim travel and subsistence?

[northernladuk]

Agreed, this is a very good point, and probably the only useful reply I've had in this discussion. However, does an HMRC definition exist or is it subjective? I myself can say that even when I was not contracting but working in London in permanent jobs between 2008 and 2011, I relocated to London Monday to Friday in rented accommodation at completely my own expense. There was no claiming travel or subsistence or anything like that. The only reason I did it was purely to reduce the commute because the commute was too far from my property in Surrey.

There are some pretty clear examples for London in the HMRC guides and most changes of location in London does not include a substantial change in costs / distance. A couple of zones or half hour extra on tube does not count, you need to be thinking geographical area not within the city.

A long discussion on this can be found below....

http://forums.contractoruk.com/accou...-expenses.html

I also believe the fact you have been in London for permie or contract the clock continues to tick as it is your permanent place of work so you will be over it now. I can't find a thread that confirms this but sure I have seen one.

Just to be clear as well, an odd couple of months outside may not restart the clock either. The details of the rule state more than 40% of your time in a rolling 24 months so you would need a 6 monther or more away to restart the clock and even then you will hit the 40% again very quickly.

I would concentrate on working out if you are falling foul of the 24 month rule, which you indicate you are because if you are everything else discussed would then be irrelevant.

[northernladuk]

Regarding your comment about openly committing tax evasion, I take that on board because this would echo similar to what the MPs were doing, right? However, there is one other twist to this tale. My London property is specifically a live/work unit. In other words, it is not residential. Therefore, by way of the leasehold on the property, I cannot live there without conducting some sort of business in the property. Would this not add credence to the fact that it is for work only and with my Surrey property being my PPR, I may claim travel and subsistence?

How on earth have you pulled that one off? You sleeping in a warehouse or something? Most rental agreements forbade business being done in the property. I have never heard of one that stipulates you do business in the property? I have seen agreements where you cannot live in a business property for insurance reasons. If this is even true you want to look carefully at it. Living in it is NOT doing business in it. It would add no credence either way so make no difference, especially if you are outside the 24 month rule.

[Guest22]

There are some pretty clear examples for London in the HMRC guides and most changes of location in London does not include a substantial change in costs / distance. A couple of zones or half hour extra on tube does not count, you need to be thinking geographical area not within the city.

A long discussion on this can be found below....

http://forums.contractoruk.com/accou...-expenses.html

I also believe the fact you have been in London for permie or contract the clock continues to tick as it is your permanent place of work so you will be over it now. I can't find a thread that confirms this but sure I have seen one.

Just to be clear as well, an odd couple of months outside may not restart the clock either. The details of the rule state more than 40% of your time in a rolling 24 months so you would need a 6 monther or more away to restart the clock and even then you will hit the 40% again very quickly.

I would concentrate on working out if you are falling foul of the 24 month rule, which you indicate you are because if you are everything else discussed would then be irrelevant.

Finally, some good useful info! That's a good thread - I wasn't aware of the rolling 24-month 40% rule. If I am 'caught', then that makes this whole discussion about whether I can claim travel if I live in my owned London property irrelevant. So, the question is, if I worked in Canary Wharf from 2008 to end of 2011, had a few months outside of London, then worked in the Square Mile from April 2012, has my workplace changed? I figure not. Hmm, this could be disappointing for me.

In any case, I find cojak's comments about the M4 corridor on that other thread very interesting. My Surrey property is on the M3 corridor, which is similar in context.

This could throw a massive spanner in my whole expense claiming for travel over the last couple of months now. At least I can still claim rent and subsistence, though, as these aren't affected by the two-year rule.

How on earth have you pulled that one off? You sleeping in a warehouse or something? Most rental agreements forbade business being done in the property. I have never heard of one that stipulates you do business in the property? I have seen agreements where you cannot live in a business property for insurance reasons. If this is even true you want to look carefully at it. Living in it is NOT doing business in it. If it is a business lease insurances would be problem if you live in it as well. It would add no credence either way so make no difference, especially if you are outside the 24 month rule.

Who said anything about a rental agreement? You really should learn to read.

[Sockpuppet]

This could throw a massive spanner in my whole expense claiming for travel over the last couple of months now. At least I can still claim rent and subsistence, though, as these aren't affected by the two-year rule.

The general rule is that when its no longer a temporary workplace all the subsistence, rent, hotel rooms, travel if provided by the company become BIK. In this case your not at a temporary workplace, so you can no longer claim any of what you are claiming.

[northernladuk]

Who said anything about a rental agreement? You really should learn to read.

You need to learn to **** off. Ungrateful twat.

[Guest22]

The general rule is that when its no longer a temporary workplace all the subsistence, rent, hotel rooms, travel if provided by the company become BIK. In this case your not at a temporary workplace, so you can no longer claim any of what you are claiming.

The two-year rule only relates to travel.

[northernladuk]

The two-year rule only relates to travel.

24 month rule and expenses for Contractors : Contractor Umbrella

You are permitted to claim travel and accomodation expenses, providing your workplace meets HMRC’s definition of a temporary site; whereby your attendance lasts no longer than 24 months. At the point you know that your contract will last beyond 24 months, you must stop claiming expenses. If for example, you agree a 36 month contract, from the outset no expenses at all can be claimed against the contract.

There is a further rule which means that when an individual spends more than 40% of their time at a workplace for an assignment which has exceeded 24 months, travel and accomodation expenses will also not be permitted.

[northernladuk]

The two-year rule only relates to travel.

The 24 Month Rule | Umbrella Company Guide - Articles | Umbrella Company UK

A contractor is allowed to claim expenses on the basis that their place of work meets Her Majesty’s Revenue and Custom’s classification of a temporary work place - meaning that their contract or work at the site lasts no longer than a maximum of 24 months. At the time you become aware that your contract with that client at that work place will last for longer than the 24 months, you must cease claiming expenses and make HMRC aware of your change in circumstances. If for instance, you accept a 36 month agreement from the beginning of the work, no expenses at all can be claimed by the contractor with the HMRC based on the work performed during the performance of the contract. \r\n\r\nAfter 24 months, if a contractor spends 40% or over of his/her time at the same place of work then travel between their home residence and that place or accommodation expenses are no longer allowed

[SueEllen]

Who said anything about a rental agreement? You really should learn to read.

In England a rental agreement can be verbal i.e. you can move in here and stay as long as we agree.

If it is then the relevant Housing Act protects your rights but also inserts some conditions.

Arguing with NLUK whether it's a place of business or not is pointless as if you ended up with a case with HMRC and it went before a judge, it would be up to the judge to decide what type of agreement you had.

And to be honest with what you are trying to pull off it would be the least of your worries.