Personal Incidentals needing receipts?

[lifexplorer]

Hi there,

Was just wondering whether, operating with limited company, I need receipts for personal incidentals?

My accountancy is telling me that I do, and only Umbrella companies and large accompanies with special dispensations from HMRC can exclusions for receipts for the £5/day incidentals alowance when staying overnight - however every single bit of information about this on the internet says that receipts are not required.

My accountancy also said I don't have to spend specifically £5/day to claim as well (I'm away 3 nights a week typically so as long as my incidentals averaged out to £15/week I'd be ok), though I read something somewhere that said I could only claim for continuous periods - so £15/week but not £30 in one week for the last two for example.

As such, wondering what the actual story is on this? By making it a point to buy my toilertires, newspapers and doing my dry cleaning away I can max out the allowance easily, though it can be a bit of a pain to track it all... and my previous accountancy for a brief contracting stint I did years ago said it was just fine to claim £5/day while away. (Though said accountancy was also *grossly* incompetent in various other ways, so not exactly trusting their steer, or lack, on anything).

Cheers!

[northernladuk]

It's so trivial it isn't really worth getting wound up about. I always keep receipts whatever just out of habit, petrol VAT receipts, incidentals and so on. They just go in a big envelope. Yes you may not need them but when HMIT comes in I can slap them all on his desk to show I am diligent in running my LTD. Takes me no time at all and no fuss so can't see why not even if it isn't strictly needed.

Pocket receipts from time to time put em in a bag and put £5 in your spreadsheet. I can't believe for one minute HMIT have the time to check every receipt to make a fiver a day.

[captainham]

As far as I'm aware, you don't need receipts for such incidentals, no. I don't keep any anyway (although I do for everything else of course), and as there are zero reporting requirements around them (as long as you keep within the limits) then I can't imagine HMRC could (or would) say anything about it.

For info: http://www.hmrc.gov.uk/guidance/480_appendix8.pdf

[captainham]

And also opening sentence of this little puppy:

Class 1 NICs : Expenses and allowances : Incidental overnight expenses (previously Personal incidental expenses or PIEs) : Evidence required

[captainham]

Oh and one other thing: a dispensation doesn't mean you can/can't claim for something specific; everyone can claim for the same things, umbrella/large co/small co/whatever.

A dispensation will just reduce your reporting requirements around certain items, reducing the burden it takes to report these items to HMRC at year end (on P11Ds, etc).

[Ketchup]

I have 2 sections in my wallet, one for personal and one was business. All of my business receipts go in one section, personal in the other. Once a month i go through them, expense them to my LTD then put a staple through them and put them in a folder. Chances are i will never need them, but i have some reassurance that should hector come knocking, i can show receipts for exactly what i have expensed.

Some people i know claim the £5 incidentals, IMO claiming the full £5 a day could be seen as a red-flag, and who really buys much anymore that can't be receipted?

[captainham]

Some people i know claim the £5 incidentals, IMO claiming the full £5 a day could be seen as a red-flag, and who really buys much anymore that can't be receipted?

Round of beers in the hotel bar after work and can't be arsed to ask for a receipt, errrrr, I mean laundry, sorry, yes I meant laundry.

[SueEllen]

Some people i know claim the £5 incidentals, IMO claiming the full £5 a day could be seen as a red-flag, and who really buys much anymore that can't be receipted?

Why?

You have to claim the full amount everyday for your stay away otherwise you can't claim at all and things like laundry expenses which are excluded from expenses unless it's an emergency, or using a vending machine where you can't get a receipt are covered by this amount.

lifexplorer even though you don't need a dispensation for these incidental expenses, you can apply for a dispensation for your limited company though you need to have at least 2 people involved in the company i.e. 2 directors, a company secretary and a director.

Secondly as your accountant doesn't seem to have a clue about small limited companies it may be a good idea to change to an accountant who frequents these boards just until you get on your feet.

[captainham]

Why?

You have to claim the full amount everyday for your stay away otherwise you can't claim at all and things like laundry expenses which are excluded from expenses unless it's an emergency, or using a vending machine where you can't get a receipt are covered by this amount.

Not true; it's a limit that you can claim up to, not a specific amount that you need to claim for each day (and it can be aggregated over the duration of the whole stay).

lifexplorer even though you don't need a dispensation for these incidental expenses, you can apply for a dispensation for your limited company though you need to have at least 2 people involved in the company i.e. 2 directors, a company secretary and a director.

Also not true; if you are a genuine one band, then as per the link you provided above, you must:
- ensure all expenses claims are supported by receipts for the expenditure
- demonstrate that the claim relates to expenditure that can be covered by a dispensation - your receipts may be sufficient for this purpose, but if not you must retain additional information

Note that PIEs do not apply to these rules, i.e. just because you are a one man band doesn't mean you have to suddenly start collecting receipts for PIEs. It is not possible for PIEs to be covered by a dispensation simply because they are covered by their own rules and therefore PIEs are exempt from reporting requirements (if within the prescribed limits).

Secondly as your accountant doesn't seem to have a clue about small limited companies it may be a good idea to change to an accountant who frequents these boards just until you get on your feet.

Although I am inclined to agree with this

[escapeUK]

My accountancy also said I don't have to spend specifically £5/day to claim as well (I'm away 3 nights a week typically so as long as my incidentals averaged out to £15/week I'd be ok), though I read something somewhere that said I could only claim for continuous periods - so £15/week but not £30 in one week for the last two for example.

When I started working via a ltd and I was earning thousands a week, I decided I wasnt bothered about saving the tax on £25 a week. (IE £5) It just wasnt worth my time, or the money it saved.