About to contract again - advice please

[gadgetman]

I'm due to start my first contract for many years in a couple of weeks - everything has changed since I last contracted, pre-IR35.

Anyway, having read these forums, the hype and truth about umbrella company expense receipt dispensations etc it looks like a managed Ltd Co is the way to go and I'm considering getting SJD to handle this for me.

However, despite reading all the guides I'm still a little unclear on what I can claim as expenses as the guides don't seem to distinguish between contracts inside or out of IR35.

I will be living and working away from home in the week and possibly lodging with my brother, depending on whether it is better or not from an expenses point of view.

I'm looking at the worst case as being caught by IR35. A few questions I have so far are:

1. Are there any limits for accommodation costs?
2. If I use the standard 40p / mile figure to claim for mileage does this then remove my petrol (and the VAT) and other car running costs from the equation?
3. Would it be better to arrange and claim for my own accommodation or to lodge with my brother where I believe a standard allowance of £25 / day applies?
4. Can I claim for all meals whilst working away from home?
5. What is the situation with claiming for hardware? I definitely need to buy a laptop and possibly some other hardware. I've seen a 'magic' figure of £2000 mentioned but I don't understand what this relates to or whether it would be applicable to my situation.
6. I'm not familiar with this flat rate VAT scheme. Any pointers to info on this?
7. If I run a limited company do I still have to put away holiday pay like with an umbrella?
8. What sort of expenses would be deemed to be included in the blanket 5% allowance and what would not?
9. Is there anything else I can claim for?

A lot of questions I know but I'm trying to get a handle on what I can expect my net pay to be and so far haven't been able to find the answers that would allow me to do the calculations.

Any advice would be appreciated.

[Sockpuppet]

I'm due to start my first contract for many years in a couple of weeks - everything has changed since I last contracted, pre-IR35.

Anyway, having read these forums, the hype and truth about umbrella company expense receipt dispensations etc it looks like a managed Ltd Co is the way to go and I'm considering getting SJD to handle this for me.

However, despite reading all the guides I'm still a little unclear on what I can claim as expenses as the guides don't seem to distinguish between contracts inside or out of IR35.

I will be living and working away from home in the week and possibly lodging with my brother, depending on whether it is better or not from an expenses point of view.

I'm looking at the worst case as being caught by IR35. A few questions I have so far are:

1. Are there any limits for accommodation costs?
2. If I use the standard 40p / mile figure to claim for mileage does this then remove my petrol (and the VAT) and other car running costs from the equation?
3. Would it be better to arrange and claim for my own accommodation or to lodge with my brother where I believe a standard allowance of £25 / day applies?
4. Can I claim for all meals whilst working away from home?
5. What is the situation with claiming for hardware? I definitely need to buy a laptop and possibly some other hardware. I've seen a 'magic' figure of £2000 mentioned but I don't understand what this relates to or whether it would be applicable to my situation.
6. I'm not familiar with this flat rate VAT scheme. Any pointers to info on this?
7. If I run a limited company do I still have to put away holiday pay like with an umbrella?
8. What sort of expenses would be deemed to be included in the blanket 5% allowance and what would not?
9. Is there anything else I can claim for?

A lot of questions I know but I'm trying to get a handle on what I can expect my net pay to be and so far haven't been able to find the answers that would allow me to do the calculations.

Any advice would be appreciated.

Dude, get an accountant. I pay mine to worry about all of those questions above for me.

[cojak]

Oh, yes - they are definately worth paying for.

Them and contract specialists.

Remember the advice you get from here is worth the amount for pay for it...

[gadgetman]

The point is I'm trying to decide which way to go before employing an accountant, hence the queries.

[VectraMan]

The way to go is not to get caught by IR35, and forget about treating expenses as a way of earning more money. That is why the dodgier umbrellas have a bad reputation.

The flat rate VAT scheme means you pay less VAT whilst charging the full amount, but give up being able to claim back VAT on purchases unless they're over £2000. Usually this means a modest profit, so is worth it unless you're planning on buying a lot of stuff.

[Gonzo]

I'm due to start my first contract for many years in a couple of weeks - everything has changed since I last contracted, pre-IR35.

Anyway, having read these forums, the hype and truth about umbrella company expense receipt dispensations etc it looks like a managed Ltd Co is the way to go and I'm considering getting SJD to handle this for me.

However, despite reading all the guides I'm still a little unclear on what I can claim as expenses as the guides don't seem to distinguish between contracts inside or out of IR35.

I will be living and working away from home in the week and possibly lodging with my brother, depending on whether it is better or not from an expenses point of view.

I'm looking at the worst case as being caught by IR35. A few questions I have so far are:

1. Are there any limits for accommodation costs?
2. If I use the standard 40p / mile figure to claim for mileage does this then remove my petrol (and the VAT) and other car running costs from the equation?
3. Would it be better to arrange and claim for my own accommodation or to lodge with my brother where I believe a standard allowance of £25 / day applies?
4. Can I claim for all meals whilst working away from home?
5. What is the situation with claiming for hardware? I definitely need to buy a laptop and possibly some other hardware. I've seen a 'magic' figure of £2000 mentioned but I don't understand what this relates to or whether it would be applicable to my situation.
6. I'm not familiar with this flat rate VAT scheme. Any pointers to info on this?
7. If I run a limited company do I still have to put away holiday pay like with an umbrella?
8. What sort of expenses would be deemed to be included in the blanket 5% allowance and what would not?
9. Is there anything else I can claim for?
A lot of questions I know but I'm trying to get a handle on what I can expect my net pay to be and so far haven't been able to find the answers that would allow me to do the calculations.

Any advice would be appreciated.

I think that the problem here is that there are a lot of questions and the answers will depend on what corporate format you ultimately use. That could be why noone is very keen to take these answers on.

I was in the process of drafting a much more involved answer but I see Vectraman beat me with a much more succint answer. All these topics are regularly covered on this site but I will point you at this thread as a starter.

http://forums.contractoruk.com/thread11325.html


This is not I am a customer of theirs though, and used their guidance when I was starting out.

[Nixon Williams]

I'm looking at the worst case as being caught by IR35. A few questions I have so far are:

1. Are there any limits for accommodation costs?
2. If I use the standard 40p / mile figure to claim for mileage does this then remove my petrol (and the VAT) and other car running costs from the equation?
3. Would it be better to arrange and claim for my own accommodation or to lodge with my brother where I believe a standard allowance of £25 / day applies?
4. Can I claim for all meals whilst working away from home?
5. What is the situation with claiming for hardware? I definitely need to buy a laptop and possibly some other hardware. I've seen a 'magic' figure of £2000 mentioned but I don't understand what this relates to or whether it would be applicable to my situation.
6. I'm not familiar with this flat rate VAT scheme. Any pointers to info on this?
7. If I run a limited company do I still have to put away holiday pay like with an umbrella?
8. What sort of expenses would be deemed to be included in the blanket 5% allowance and what would not?
9. Is there anything else I can claim for?

A lot of questions I know but I'm trying to get a handle on what I can expect my net pay to be and so far haven't been able to find the answers that would allow me to do the calculations.

Any advice would be appreciated.

A quick reply would be:

1. No
2. Yes
3. There is no "standard allowance" but you can claim for either subject to certain rules.
4. Possibly, depends upon circumstances
5. The £2000 limit is related to Flat Rate VAT - you can purchase a laptop etc but VAT would only be reclaimed if it cost over £2000
6. For most of our clients, they are better off on the Flat Rate Scheme
7. No.
8. Basically, travel, accommodation etc, pension contributions plus a few others.
9. Anything that you incur in pursuit of the business, but take advice on anything odd!

Feel free to ask anything else either direct or via this forum.

Alan

[gadgetman]

Thanks very much for the replies, especially the detailed one from Alan.

Just to clarify this point on flat rate VAT and the £2000.

So the situation is that if I use the flat rate scheme then I can still claim VAT back on purchases of £2000 or above?

If so, does this have to be individual items? I am thinking of a new desktop, NAS file server and laptop which combined may well be over £2000 but individually would not.

On point 8, I am now a little confused. My understanding was that you could claim a blanket 5% for the costs of running a business without the need for receipts but that travel, accommodation etc would be in addition to that. Is my interpretation incorrect?

[Nixon Williams]

Thanks very much for the replies, especially the detailed one from Alan.

Just to clarify this point on flat rate VAT and the £2000.

So the situation is that if I use the flat rate scheme then I can still claim VAT back on purchases of £2000 or above?

If so, does this have to be individual items? I am thinking of a new desktop, NAS file server and laptop which combined may well be over £2000 but individually would not.

On point 8, I am now a little confused. My understanding was that you could claim a blanket 5% for the costs of running a business without the need for receipts but that travel, accommodation etc would be in addition to that. Is my interpretation incorrect?

The items above £2000 is for single items. Unless you plan to buy a heck of a lot of equipment the Flat Rate Scheme is probably still the best option.

The 5% allowance is only used as a means to calculate the deemed salary you have to pay under the IR35 rules. So you still need to incur the expenses and keep receipts for corporation tax etc.

The 5% is in addition to the travel/accommodation etc.

I hope this helps

Alan

[lukemg]

I use managed limited from SJD - separate Ltd co, not dodgy composite. Takes all the grief away. Get your contract/working conditions checked out by them for IR35. They aren't cheap, but they are organised, happy to answer queries, process invoices etc efficiently. In short - highly recommended. Had my own ltd last time, it was a pain, I don't want to do the paperwork (yeah I know it's not that hard to do). I work, they do the paperwork and that arrangement suits me fine.