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pjt
7th October 2015, 08:49
First post folks. I have been following the recent proposal's from HMRC with horror, the most concerning to me is the T&S changes. This would effectively kill my business. Did anyone else get an email from Contractor Weekly detailing an updated paper which appears to suggest its only daily expenses that would be impacted...

"Abolishing daily subsistence relief would prevent contractors from being able to claim the cost of lunch whilst on a business journey. Such an expense, it is argued, is effectively a private expense. However, overnight subsistence such as the cost of a hotel room, or an evening meal/breakfast whilst staying away from home overnight on a business journey would not be affected."

Fully link here.

Food for thought - Contractor Weekly (http://www.contractorweekly.com/contractor-news/tax-a-ir35-news/1232-food-for-thought?)

Is this wishful thinking or am I missing something?

yakitoo
7th October 2015, 10:01
Is this wishful thinking or am I missing something?

I suspect that "......Neither will the government change the restrictions of travel and subsistence relief for employees working through employment intermediaries." might be the significant part.

DaveB
7th October 2015, 10:06
I suspect that "......Neither will the government change the restrictions of travel and subsistence relief for employees working through employment intermediaries." might be the significant part.

Thats essentially the current situation re. inside / outside IR35. If you are inside you cant claim T&S, just a flat 5% expenses allowance. If outside then the new proposals would apply. The crunch will be on the changes to SD&C and the impact on IR35 status that follows.

pjt
7th October 2015, 10:19
Thats essentially the current situation re. inside / outside IR35. If you are inside you cant claim T&S, just a flat 5% expenses allowance. If outside then the new proposals would apply. The crunch will be on the changes to SD&C and the impact on IR35 status that follows.

Dave
Is that the case though? I always thought IR35 meant no T&S. But reading up the 5% flat rate expenses appears to be on top of T&S. See below

Calculating your salary under IR35 - The Interim Hub - for all things Interim (http://www.interim-hub.com/calculating-your-salary-under-ir35.html)

Cheers

Paul

TheFaQQer
7th October 2015, 10:44
I suspect that "......Neither will the government change the restrictions of travel and subsistence relief for employees working through employment intermediaries." might be the significant part.

That would be my take on it - it's aimed at employed consultants. It refers to an "employed IT contractor", but what it means is "someone working for a Professional Service Company", I suspect.

pjt
7th October 2015, 10:51
That would be my take on it - it's aimed at employed consultants. It refers to an "employed IT contractor", but what it means is "someone working for a Professional Service Company", I suspect.

The way I read that though is that current restrictions wont be affected. As I said above as far as I understand even under IR35 at the moment T&S is allowed on top of the 5% flat rate. So surely even if they catch us all with IR35 the T&S changes may not be as bad as first indicated.

I suspect I'm clutching at straws but hope I'm not.

jamesbrown
7th October 2015, 11:11
The way I read that though is that current restrictions wont be affected. As I said above as far as I understand even under IR35 at the moment T&S is allowed on top of the 5% flat rate. So surely even if they catch us all with IR35 the T&S changes may not be as bad as first indicated.

I suspect I'm clutching at straws but hope I'm not.

I'm not sure I follow what you're saying here, but T&S is not part of the 5% allowance, which is for administration only, and any changes to T&S are separate from those w/r to IR35 (that is part of the criticism), so any changes will also affect those currently inside IR35. This is my understanding of the proposed scenario:

Ordinary commuting, subject to SDC (which may or may not currently imply inside IR35): no T&S relief
Ordinary commuting, not subject to SDC (which currently implies outside IR35): T&S relief
Business travel: T&S relief
Daily subsistence (separate proposal): no T&S relief
Overnight subsistence (separate proposal): T&S relief

The important distinction here is between "ordinary commuting" and "business travel". Business travel (including that of employees) attracts relief, and there are no proposals to change that.

pjt
7th October 2015, 12:07
I'm not sure I follow what you're saying here, but T&S is not part of the 5% allowance, which is for administration only, and any changes to T&S are separate from those w/r to IR35 (that is part of the criticism), so any changes will also affect those currently inside IR35. This is my understanding of the proposed scenario:

Ordinary commuting, subject to SDC (which may or may not currently imply inside IR35): no T&S relief
Ordinary commuting, not subject to SDC (which currently implies outside IR35): T&S relief
Business travel: T&S relief
Daily subsistence (separate proposal): no T&S relief
Overnight subsistence (separate proposal): T&S relief

The important distinction here is between "ordinary commuting" and "business travel". Business travel (including that of employees) attracts relief, and there are no proposals to change that.

James thanks that's cleared it up. Yes it appears I was clucking at straws and had missed the difference between business travel and ordinary commuting! Oh well.

Of all the current proposals I can live with the T&S least and I actually think this would be the end for me. Its that bad being forced to work inside IR35 would actually be a better option for me! I'm guessing we can only pray for a miracle ahead of the Autumn budget :frown

PurpleGorilla
7th October 2015, 14:22
I read the CW article but I confused as hell.

If I take a trip to a client site from my home-office (registered address) - can I still claim the miles.

If not, WTF not!

TheFaQQer
7th October 2015, 15:13
I read the CW article but I confused as hell.

If I take a trip to a client site from my home-office (registered address) - can I still claim the miles.

If not, WTF not!

It'll all become clear soon enough - who ever heard of the government not providing absolute clarity in the rules?

LisaContractorUmbrella
9th October 2015, 07:27
The confusion here has come because there have been 2 T&S consultations going on at HMRC - one involves contractors specifically and one involves the workforce at large. HMG decided that the whole issue of T&S expenses needed looking at but that intermediary workers was their main priority - that's why the situation will change for contractors in April next year but not the population at large. I think the article the OP referred to is concerned with the 'majority' consultation

fidot
9th October 2015, 12:46
So it does still affect us, but it's not targeted at freelancers.

PurpleGorilla
10th October 2015, 07:27
So it does still affect us, but it's not targeted at freelancers.

Got it, come April 2016 were farked

Zero Liability
10th October 2015, 10:44
Got it, come April 2016 were farked

Depends on how big a part T&S play in running your business; it may just end up making the "flexible" labour force that much less flexible. Combined with the new dividend tax it could have a rather nasty hit.

PurpleGorilla
10th October 2015, 11:01
Depends on how big a part T&S play in running your business; it may just end up making the "flexible" labour force that much less flexible. Combined with the new dividend tax it could have a rather nasty hit.

For me around £800/m travel

SpontaneousOrder
10th October 2015, 19:13
For me around £800/m travel

For me whatever the tax is on £1500 a month.

oracleslave
10th October 2015, 19:51
It'll all become clear soon enough - who ever heard of the government not providing absolute clarity in the rules?

Now or retrospectively?

TykeMerc
10th October 2015, 19:57
For me whatever the tax is on £1500 a month.

£1,500 - £2,000 average here, unsustainable for obvious reasons. If nothing else it takes up a LOT of the tax band before the upper rate kicks in, if it's liable for tax it must be included in tax banding.


Now or retrospectively?

Fair question given past history, fortunately there's been no indication of a possible retrospective element, but I'm sure at one point the NTRT folks felt that way, no way to have any certainty.

PurpleGorilla
11th October 2015, 08:16
I really don't see why it is OK for a small consultancy with several staff to legitimately claim T&S, but for a one man ltd co consultancy it will no longer be legit. It makes me mad.

cojak
11th October 2015, 09:42
I really don't see why it is OK for a small consultancy with several staff to legitimately claim T&S, but for a one man ltd co consultancy it will no longer be legit. It makes me mad.

In the small consultancy I've recently worked with, their permie consultants have to pay the first £150 of their monthly expenses out of their own pocket. This was agreed with HMRC, so don't think they get away with it scot-free.

TykeMerc
11th October 2015, 10:09
In the small consultancy I've recently worked with, their permie consultants have to pay the first £150 of their monthly expenses out of their own pocket. This was agreed with HMRC, so don't think they get away with it scot-free.

That could very easily be an arrangement so that they don't have to fret about personal use of things like fuel cards or some other "benefit". I've worked on and off for years with a 5 man band in production engineering and they get their expenses back in full, they can't see any reason that will change, I had coffee there the other day and we discussed it.

One absurdity is that they're trying to differentiate the one man contractor from a small business that may only hire staff now and then (which a one man consultancy may well do, I certainly have in the past I'm sure a fair few CUK posters have). The logical extension to that is the FLC idea which the delightful IPSE clowns have handed them, a lovely easy way to differentiate, legislate and set rules just for contractors without upsetting the "genuine business" applecart, all the accusations of unfairness go away too.

fool
11th October 2015, 15:22
I really don't see why it is OK for a small consultancy with several staff to legitimately claim T&S, but for a one man ltd co consultancy it will no longer be legit. It makes me mad.

This is what really annoys me. While I don't like it, paying more tax doesn't enrage me. What does is HMRCs insistence that our companies are somehow different. I'd argue that they're not different, they're just smaller.

All this will really achieve is making companies harder to run (the entirety of IR35 does this and needs to be put in the bin) and makes it more difficult for us to expand our small business as we have a tulip ton of legalisation to understand rather than just focusing on growing our companies.

Sure, many of us are just planning to be one man companies ( not myself ) but I don't see why they shouldn't be able to incoperate to their advantage when others are able to. The line should be drawn at the obvious point of incorporating not some vague HMRC defined line in the sand.

gables
12th October 2015, 11:17
This is what really annoys me. While I don't like it, paying more tax doesn't enrage me. What does is HMRCs insistence that our companies are somehow different. I'd argue that they're not different, they're just smaller.

All this will really achieve is making companies harder to run (the entirety of IR35 does this and needs to be put in the bin) and makes it more difficult for us to expand our small business as we have a tulip ton of legalisation to understand rather than just focusing on growing our companies.

Sure, many of us are just planning to be one man companies ( not myself ) but I don't see why they shouldn't be able to incoperate to their advantage when others are able to. The line should be drawn at the obvious point of incorporating not some vague HMRC defined line in the sand.

And then to make in more insulting, through in the term 'disguised employee' :mad

MrMarkyMark
12th October 2015, 15:19
In the small consultancy I've recently worked with, their permie consultants have to pay the first £150 of their monthly expenses out of their own pocket. This was agreed with HMRC, so don't think they get away with it scot-free.

Did the consultancy roll over for HMRC?
I wouldn't be happy with this at all, especially as a permie.