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Case2012
4th December 2012, 22:06
I recently set up my own limited company and began working in the City of London. I drive to the local tube station, take the tube and spend over 10 hours at my temporary place of employment. My normal place of employment is my home address.

My understanding was that I can claim business mileage, recover the cost of the tube fare and claim subsistence from my employer (my Ltd company). Another accountant told me that this was incorrect and this was not allowable following a recent tax case. He quoted something about the journey being substantially similar to my normal commute.

I am sure that he is wrong. My normal place of employment is my home. The venue that I attend is therefore my temporary place of employment. Its not like I travel from A to B and then changed from A to C (with C being close to B).

Please can some accoutants on this forum confirm that my understanding is correct? Has there been any case this year?

Also, am I correct that I can pay upto 100% of my annual salary into a pension scheme even if I do not pay any tax during the year?

SimonMac
5th December 2012, 09:06
I recently set up my own limited company and began working in the City of London. I drive to the local tube station, take the tube and spend over 10 hours at my temporary place of employment. My normal place of employment is my home address.

My understanding was that I can claim business mileage, recover the cost of the tube fare and claim subsistence from my employer (my Ltd company). Another accountant told me that this was incorrect and this was not allowable following a recent tax case. He quoted something about the journey being substantially similar to my normal commute.

I am sure that he is wrong. My normal place of employment is my home. The venue that I attend is therefore my temporary place of employment. Its not like I travel from A to B and then changed from A to C (with C being close to B).

Please can some accoutants on this forum confirm that my understanding is correct? Has there been any case this year?

Also, am I correct that I can pay upto 100% of my annual salary into a pension scheme even if I do not pay any tax during the year?

I assume they are talking about the 24 month rules, use the search function (OR google "site:forums.contractoruk.com/accounting-legal 24 month") and read the First Timers guide on the right --->

As for pension, yes you are correct, upto 100% of your pension of £50,000 which ever is the highest although todays mini budget is expected to change that to about £30,000

Welcome to the forum

LisaContractorUmbrella
5th December 2012, 10:17
Did you work in the city before setting up your limited company?

northernladuk
5th December 2012, 10:54
My understanding was that I can claim business mileage, recover the cost of the tube fare and claim subsistence from my employer (my Ltd company). Another accountant told me that this was incorrect and this was not allowable following a recent tax case. He quoted something about the journey being substantially similar to my normal commute.

I am sure that he is wrong. My normal place of employment is my home. The venue that I attend is therefore my temporary place of employment. Its not like I travel from A to B and then changed from A to C (with C being close to B).

Please can some accoutants on this forum confirm that my understanding is correct? Has there been any case this year?

Also, am I correct that I can pay upto 100% of my annual salary into a pension scheme even if I do not pay any tax during the year?

I think you have told your accountant something you haven't told us. 24 month rule is all about geographic location. If you have worked in that location for more than 2 years it effectively becomes your permanent place of work regardless if you think your home is. If you have worked in the city before you started contracting the 24 month clock continues to tick. It only resets when you spend a reasonable amount of time away from that geographic location i.e. out of London and we are talking 6 months plus.

Changing offices in the city does not restart the clock.

Why do you think your accountant is wrong when you don't have an understanding of the legislation he is basing his opinion on?

Case2012
5th December 2012, 13:05
I used to work in the City until Jan 2011. Then I left. I began working again in the City (through an umbrella company) in Sept 2012. After one month I set up my own Ltd company in Oct 2012 and then went to the same temporary work location as I was with the umbrella company.

I am assuming that with the umbrella company my permanent place of employment was my home (as they allowed me to claim T&S). With my own Ltd my permanent place is my home. This all equates to less than 24 months.

LisaContractorUmbrella
5th December 2012, 14:10
I used to work in the City until Jan 2011. Then I left. I began working again in the City (through an umbrella company) in Sept 2012. After one month I set up my own Ltd company in Oct 2012 and then went to the same temporary work location as I was with the umbrella company.

I am assuming that with the umbrella company my permanent place of employment was my home (as they allowed me to claim T&S). With my own Ltd my permanent place is my home. This all equates to less than 24 months.

How long did you work in the city for up to Jan 2011? It sounds as though this may fall under 40% rule

northernladuk
5th December 2012, 14:30
I used to work in the City until Jan 2011. Then I left. I began working again in the City (through an umbrella company) in Sept 2012. After one month I set up my own Ltd company in Oct 2012 and then went to the same temporary work location as I was with the umbrella company.

I am assuming that with the umbrella company my permanent place of employment was my home (as they allowed me to claim T&S). With my own Ltd my permanent place is my home. This all equates to less than 24 months.

If you do one assigment with an umbrella that becomes your permanent place of work though no?

Case2012
5th December 2012, 14:31
From Sept 07 to March 2011 I was an employee paid through PAYE and worked in the City 5 days a week.

Then there was a gap of 18 months before I came back to the City in Sept 2012 (as I was unemployed). Surely this is long enough gap?

Then from Sept 2012 to Oct 2012 I worked for an umbrella company at a completely different location in the City to any of my previous employments. My permanent place must have been my home as otherwise I would not have been permitted to claim T&S. This assignment was for one month.

Then from Oct to Dec 2012 I worked through my own Ltd company.

northernladuk
5th December 2012, 15:14
Then from Sept 2012 to Oct 2012 I worked for an umbrella company at a completely different location in the City to any of my previous employments. My permanent place must have been my home as otherwise I would not have been permitted to claim T&S. This assignment was for one month.


I believe this is wrong... As I mentioned and as can be seen in the threads below the one month assignment in London makes it your permanent workplace.

http://forums.contractoruk.com/umbrella-companies/83315-end-first-contract-umbrella-company.html

http://forums.contractoruk.com/accounting-legal/82011-umbrella-cancelling-previous-expense-claims.html

Case2012
5th December 2012, 16:17
This may present a problem. However, don't you look at each employment separately? So the T&C for the Umbrella part may be disallowed (unless I work elsewhere for them in the current tax year).

However, under my own Ltd co isn't my permenent place of employment where the company is registered (my home) and what is specified in the employment contract between me and my Ltd company? Thus any assignment or trip away from my permanent place of employment is a business trip and thus allowable?

Case2012
5th December 2012, 17:50
I'm sure this on this. My permanent place of employment ought to be what is stated in my employment contract, unless I work at the temporary location for a period of 24 months.

The Ltd company is based at my home therefore that ought to be my permanent place of work and subject to the 24 month rule and working away from my home would be a temporary location.

The other accountant's reasoning what based on a tax case involving a barrister. The barrister went from A to B. Then A to C. B and C were close so HMRC disallowed the claim as the journey was substantially similar.

Lets see what Lisa says on this one. Thanks for your help.

malvolio
5th December 2012, 18:34
I'm sure this on this. My permanent place of employment ought to be what is stated in my employment contract, unless I work at the temporary location for a period of 24 months.

The Ltd company is based at my home therefore that ought to be my permanent place of work and subject to the 24 month rule and working away from my home would be a temporary location.

The other accountant's reasoning what based on a tax case involving a barrister. The barrister went from A to B. Then A to C. B and C were close so HMRC disallowed the claim as the journey was substantially similar.

Lets see what Lisa says on this one. Thanks for your help.
Well sorry but wrong.

Firstly, to keep it simple, the 24 month rule works by counting back from the known (or expected) end of your current gig. If for the 24 months up to that point you have spent 40% or more of your work time at that location, that's it, the rule applies. And location is a rough geogrpahic area like the Square Mile or Birmingham: think of it as going to the same main line terminal. As soon as you know (or expect) this is going to happen, your expense claims stop.

For the umbrella case, you can claim travel if you expect to have more than one gig while working for them. If you didn't, you're supposed to repay the tax on your expenses since it has become a BIK.

Your contract or YourCo might define your permanent workplace as a given location but after 24 months, nobody cares about that, it's where you are based. It's carp, but it's the law, and it ain't about to change.

And finally YourCo can still pay for it all if you fall foul of the rule but you are gaining the benefit so you have to declare it as earned income on your SAR.

LisaContractorUmbrella
6th December 2012, 09:32
Afraid Lisa is going to say the Malvolio is quite right

Wanderer
6th December 2012, 17:02
For the umbrella case, you can claim travel if you expect to have more than one gig while working for them. If you didn't, you're supposed to repay the tax on your expenses since it has become a BIK.

Good explanation but this part is not correct according See EIM32080 (http://www.hmrc.gov.uk/manuals/eimanual/eim32080.htm) and EIM32084 (http://www.hmrc.gov.uk/manuals/eimanual/EIM32084.htm).

What counts is that the worker's expectation is that they will work on multiple gigs for the umbrella. If the worker reaches the point where they reasonably expect that they will only work one gig for the umbrella, they are obliged to stop claiming from that point onwards.

It's important to note that as with the 24 month limit, the previous claims for tax relief on travel and subsistence are not retrospectively invalidated. As HMRC put it in EIM32080 (http://www.hmrc.gov.uk/manuals/eimanual/eim32080.htm), "The effect of the rule is not altered where the expectation does not match the outcome".

malvolio
6th December 2012, 18:05
Good explanation but this part is not correct according See EIM32080 (http://www.hmrc.gov.uk/manuals/eimanual/eim32080.htm) and EIM32084 (http://www.hmrc.gov.uk/manuals/eimanual/EIM32084.htm).

What counts is that the worker's expectation is that they will work on multiple gigs for the umbrella. If the worker reaches the point where they reasonably expect that they will only work one gig for the umbrella, they are obliged to stop claiming from that point onwards.

It's important to note that as with the 24 month limit, the previous claims for tax relief on travel and subsistence are not retrospectively invalidated. As HMRC put it in EIM32080 (http://www.hmrc.gov.uk/manuals/eimanual/eim32080.htm), "The effect of the rule is not altered where the expectation does not match the outcome".
Except for you to have a temporary workplace you must first have a permanent one. For Umbrella users that only ever work at one location, that is clearly wherever they are working. Once you have more than one, then you can have temporary ones since none of them are permanent.

It's a bit of a grey area, admittedly, and you can argue it both ways.