Govt. looking to remove travel expenses for contractors.

[DaveB]

Potential clampdown on contractor expenses | AccountingWEB

Individuals who work through their own personal service companies (PSC) could lose the ability to claim a tax deduction for the cost of travelling to their clients’ premises. Rebecca Cave explains why the government is suggesting this fundamental shift in the tax rules.

If you act for contractors working through PSCs you can make your views known by emailing HMRC on [email protected], or comment below.

[vwdan]

They really do hate us, don't they!

I doubt contracting would be financially viable for me if I couldn't claim tax relief on expenses. I'd have to go back to being permie, where I'd promptly claim exactly the same kind of expenses and my new employer (Who is magically shielded from this, I guess) could claim tax relief on them instead.

[Forbes Young]

Potential clampdown on contractor expenses | AccountingWEB

They are just discussing this - nothing has been decided, so continue as you are.

[vwdan]

They are just discussing this - nothing has been decided, so continue are you are.

It's a little bit late to do anything after they decide though, isn't it?

[stek]

They really do hate us, don't they!

I doubt contracting would be financially viable for me if I couldn't claim tax relief on expenses. I'd have to go back to being permie, where I'd promptly claim exactly the same kind of expenses and my new employer (Who is magically shielded from this, I guess) could claim tax relief on them instead.

It's only the tax on those expenses you'd lose, you're still paying them out. I'm having an extension/24 months role issue at the moment, but the actual loss to me if I did fall foul is only £11 a day in my circumstances, obviously better in my pocket but not as bad as one might think.

[DaveB]

They are just discussing this - nothing has been decided, so continue are you are.

They are suggesting you make your views known though.

If you act for contractors working through PSCs you can make your views known by emailing HMRC on [email protected], or comment below.

[vwdan]

It's only the tax on those expenses you'd lose, you're still paying them out. I'm having an extension/24 months role issue at the moment, but the actual loss to me if I did fall foul is only £11 a day in my circumstances, obviously better in my pocket but not as bad as one might think.

I did some calcs and I'm looking at about £16 a day (Or closer to £20 if I don't get to claim VAT back, too). Still, that's £400 pcm though which adds up! I was expecting worse, though.

[7specialgems]

Govt. looking to remove travel expenses *relief* for contractors.

FTFY

Will be frustrating if this goes through but I can see the logic in it.

MAR is often abused as an equity relief device.

Taking it away forces extraction through salary or dividends. To keep the net extraction at the same level will attract fresh tax.

Hector is probably also anticipating market rates to rise in response, which will increase the VAT haul and inflate the CTAX income further than the 20% extra it will already attract through being not-allowable.

The government aren't outlawing expense payments outright (lol at that idea) so I think the IPSE are going to have a fight on their hands with this one.

[eek]

From a quick glance at the document.

1) HMRC still don't understand that if you refer to something as a PSC they really need to create a legal definition of it.
2) its nice to see that they have realised that doing something has consequences (its only taken them 700 years to realise that and this is the very first example of it that I can remember).

The thing is that they are again doing this the wrong way round. They need to look at employment law and prohibit the scummy bottom of the market agencies who endeavour to pay the low skilled as little as possible. Attacking how expenses are used is not the correct approach. Requiring those agencies to use timesheets including travel time, enforce payment of least minimum wage and provide them with zero dispensation for expenses would be a far better approach.

[LisaContractorUmbrella]

<ducks> This is a discussion document and not a consultation document which means that HMRC haven't made any decisions one way or another - it is worthwhile putting in your two penn'th. Political pressure has meant that contractors have been lumped in with low paid temps and the distinction needs to be pointed out by as many people as possible. It's also worth noting that the definition of a temporary workplace would have to be looked at before anything could be done as the concept of an overarching contract is established in employment law