Should I stay or should I go?

**Sockpuppet** · 1 January 2007, 16:38

Originally posted by Onyerbike

Happy New Year. Fellow contractors.
My next contract will be away from home for about 3 months returning at weekends. I will be staying in B&B and traveling 250 miles to the new contract by train. Now then, it is going to cost me a fair amount to take this contract, at least £250 a week ,@12 weeks is £3000. Its not worth my while taking the contract if I can only claim 19% of this in tax relief.
Is it possible to claim 100% tax relief on legit travel and accommodation?
If yes I'll go if not then I'll stay

Why are you staying in a B&B 250 miles from where the contract is? Or is that 250 miles to the B&B from your house.

Are you sure your not confusing the 19% tax relief with the Corp Tax which is 19%. I though that if you were in a hotel you claimed that as an expense on 100% against profits which reduces your CT liability by 19%.

**SandyDown** · 1 January 2007, 17:07

Originally posted by Onyerbike

Happy New Year. Fellow contractors.
My next contract will be away from home for about 3 months returning at weekends. I will be staying in B&B and traveling 250 miles to the new contract by train. Now then, it is going to cost me a fair amount to take this contract, at least £250 a week ,@12 weeks is £3000. Its not worth my while taking the contract if I can only claim 19% of this in tax relief.
Is it possible to claim 100% tax relief on legit travel and accommodation?
If yes I'll go if not then I'll stay

Financially, it all depends on your rate, if the £250 represent less or around half a day's rate then I think its worth, especially when the contract is only 12 weeks it will pass quite quick.

Another thing to consider is whether this contract will have any added value to your profile e.g. is there any new skills to be learnt? if so then again its a good investment.

Also do you have skills that are in demand in the market? if you think you are going to land another contract soon with much better return then may be you should hold on, however if your chances are not that great then surely earning anything is better than earning 0 for a few weeks.

However I understand being away from home can be very exhausting and psychologically hard, so it’s up to you to weigh the pros and cons.

**Onyerbike** · 1 January 2007, 17:31

Originally posted by Onyerbike

'Why are you staying in a B&B 250 miles from where the contract is? Or is that 250 miles to the B&B from your house.

Are you sure your not confusing the 19% tax relief with the Corp Tax which is 19%. I though that if you were in a hotel you claimed that as an expense on 100% against profits which reduces your CT liability by 19%.'

Yes, I will be traveling 250 miles to the contract and staying in a B&B during the week and returning home at the weekend.That is a round trip of 500 miles/ week by train.

The contract is going to cost me £3000 to do. I had rather hoped that I could offset this amount against my total corporation tax bill rather than just deduct it from my profit (which will not be a great deal) ie if my corp tax bill is 19% of £18000 = £3400 I could deduct the £3000 of B&B and train travel expenses from this amount which would give me a Corp tax bill of £400 (actually less as I have not factored in the Marginal rate Relief)

If I can only deduct the £3000 expenses/loss from my £18000 profit that would be 19% of £15000 = £2850
then it would be pointless doing the contract as I would be working for £2850 less than my last contract.

Also the train journey is a 500 mile round trip. I have used some of the calculators on the brolly sites and they will factor this milage by train and it looks as though they are doing it @ £0.40/miles!!!

Thoughts on this will be greatly appreciated

**Onyerbike** · 1 January 2007, 17:44

Originally posted by SandyDown

Financially, it all depends on your rate, if the £250 represent less or around half a day's rate then I think its worth, especially when the contract is only 12 weeks it will pass quite quick.

Another thing to consider is whether this contract will have any added value to your profile e.g. is there any new skills to be learnt? if so then again its a good investment.
.

Thanks for your reply ,Sandy
There are of course other benefits to all new contracts other than money but if you cannot afford to do the contract because of costs/overheads then you may as well stay at home. This isnt exactly the case here but it will cost me nearly 2 days wages to do the job! frightning

**Sockpuppet** · 1 January 2007, 17:59

Originally posted by Onyerbike

The contract is going to cost me £3000 to do. I had rather hoped that I could offset this amount against my total corporation tax bill rather than just deduct it from my profit (which will not be a great deal) ie if my corp tax bill is 19% of £18000 = £3400 I could deduct the £3000 of B&B and train travel expenses from this amount which would give me a Corp tax bill of £400 (actually less as I have not factored in the Marginal rate Relief)

If I can only deduct the £3000 expenses/loss from my £18000 profit that would be 19% of £15000 = £2850
then it would be pointless doing the contract as I would be working for £2850 less than my last contract.

That gereally it. I get £2450 as what you would spend - due to the lowered CT.

I wouldnt work that far away from home for £125? a day... unless you are taknig about 2 days being the whole period in which you are on £1500 a day... in which case I wouldnt worry about it

If you are on £125 a day as a contractor and go ahead with this you'd be better of taking a daily rate equiv to that of a £19k permie job.

(60 days * £125 = £7500, £7500-£3000 = £4500, 4500/60=75, 75*260=£19.5k)

So no I wouldnt take it.

**MarillionFan** · 1 January 2007, 19:43

Its entirely reliant on what your earning. I always try to clear £325 minimum after expenses per day.

Just work it out that way. If I was offered £400 per day to work in Glasgow (full of nasty jocks) I would consider it. I could fly up, loads of things to do.

If Lotus Cars in Wymondham offerd me the same, then I would decline it as Norfolk is full of inbreds, it's a tulip location to get to, the evening life is rubbish and the company was tulipe to work for with the worst dickhead of another contractor I have ever met in my contracting life.

So as they say. Up to you.

**VectraMan** · 1 January 2007, 20:35

Originally posted by Onyerbike

Thanks for your reply ,Sandy
There are of course other benefits to all new contracts other than money but if you cannot afford to do the contract because of costs/overheads then you may as well stay at home. This isnt exactly the case here but it will cost me nearly 2 days wages to do the job! frightning

On the other hand, not doing the job will cost you 5 days wages.

Sounds a bit crap, and you may well find better in no time, but work is work and you can always leave it early if something better turns up and/or you become sick of it.

The 40p per mile is based on using a car. If you mess around with trains you'll only reclaim the amount you spend. If you use a car, then you'll get 40p per mile which will be considerably more than the actual cost in fuel (although it's meant to cover wear and tear etc. too). Plus staying away is much better if you have a car.

I like your interpretation of how expenses count against corporation tax.

**cojak** · 1 January 2007, 21:07

I like your interpretation of how expenses count against corporation tax.

Snork....

**Onyerbike** · 1 January 2007, 21:13

Originally posted by VectraMan

The 40p per mile is based on using a car. If you mess around with trains you'll only reclaim the amount you spend. If you use a car, then you'll get 40p per mile which will be considerably more than the actual cost in fuel (although it's meant to cover wear and tear etc. too). Plus staying away is much better if you have a car.

I like your interpretation of how expenses count against corporation tax.

Thanks Vectraman, well in my mind 19% for real costs incurred in doing a job will not encourage people to get on their bike, even @20p a mile

So If I did the 500 mile round trip in a car rather than train @40p a mile this will give me £200 pounds to offset against tax or is this just a £200 loss to reduce my profits by?

Should I stay or should I go?