away from home.. claiming

[cjonline]

Hi,
I've been looking over the forums and google etc and just need someone to confirm my thoughts -

if I took a contract say 100 miles from home and had to stay mon-fri in a hotel. would this be deductable from the revenue or corporation tax.. my understanding is that since it is an "expense" it would be deductive from revenue..ie revenue - expenses = profit.. therefore it would reduce any profit I would make during the contact length.. or if its directly deductible from corporation tax it wont affect my profit?

regards,
Craig.

[SimonMac]

[Louisa@InTouch]

Hi Craig,

This would be an expense for your company, providing it was to a temporary location.

Therefore you would have your net turnover - less expenses = profit.

This profit would then be subject to corporation tax.

As this is travel cost, you will need to be aware of the new SDC legislation when this comes in from April 2016.

[northernladuk]

One of the articles in the newbie guides to the right -->

Contractors’ Questions: Can I claim travel expenses? CUK02 :: Contractor UK

Good idea to spend some time in there first before asking stuff. You'll learn a lot more reading about the whole expenses area than you will asking individual questions.

[cjonline]

yes, I've looked through it but its not sinking in I dont think..

so, in leymans terms, I'd be better looking for a contract nearer to home (no traveling expenses etc) paying the same daily rate to maximize my profit.. am I correct in thinking this way?

[ASB]

Hi,
I've been looking over the forums and google etc and just need someone to confirm my thoughts -

if I took a contract say 100 miles from home and had to stay mon-fri in a hotel. would this be deductable from the revenue or corporation tax.. my understanding is that since it is an "expense" it would be deductive from revenue..ie revenue - expenses = profit.. therefore it would reduce any profit I would make during the contact length.. or if its directly deductible from corporation tax it wont affect my profit?

regards,
Craig.

As Louisa said it reduces your profit. And thus it reduces your corp tax a bit; it seems you enquiry was whether it reduces the corp tax by the amount of the expense. Sadly not, or everybody would just take a suite in the Ritz. It does mean that the impact is not quite as bad as it otherwise would have been.

Example claimable exps.

Billing 5,000
Hotel 1,000
Gross profit 4,000
Tax 800

Net profit after tax 3,200 (what's left)

If the exps were not claimable then the tax would be on 5,000 giving a tax payment of 1,000 and net income after of 3,000

[TheCyclingProgrammer]

Employee expenses reimbursed by YourCo, or paid directly, reduce your taxable profit and hence your CT bill.

Regardless of the tax position it should surely be obvious that lower expenses for a given contract equals better profitability?

[northernladuk]

I have no words....

[ASB]

Employee expenses reimbursed by YourCo, or paid directly, reduce your taxable profit and hence your CT bill.

Regardless of the tax position it should surely be obvious that lower expenses for a given contract equals better profitability?

I think what the op was hoping to see (and this does seem fairly common) was:-

Billing 5,000
Profit 5,000
Tax 1,000
Less hotel bill 1,000
Actual tax to pay zero - whoopie.

Net left 4,000

There does seem to be a common though that something being tax deductible means it is deducted from the tax payment rather than deducted from the amount charged to tax. Sadly it is the latter of course.

[LondonManc]

yes, I've looked through it but its not sinking in I dont think..

so, in leymans terms, I'd be better looking for a contract nearer to home (no traveling expenses etc) paying the same daily rate to maximize my profit.. am I correct in thinking this way?

Craig, I cannot emphasise enough - get an accountant asap. What can and cannot be claimed can change each year; your accountant is paid to keep abreast of that and advise you accordingly.