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arby
27th November 2013, 20:56
I work for a client who occasionally asks me to attend meetings at one of his facilities 125 miles away. Their expense policy is to only permit personal vehicle use for journeys less than 80 miles round-trip and to use a hire car for anything longer. So I hire a car through their arrangement with Avis on my personal credit card and then submit an expense claim to my agency which as been signed by a director within the client's management team. The agency pays my umbrella company the values ex VAT and the umbrella company treats this like my weekly salary so I claim the same expenses to the umbrella company to recover the VAT and tax and NI. This has worked fine 5 or 6 times since my contract started in April.

However, with my most recent hire car claim they have only paid 5/7s of the hire car and fuel value as they're saying that's all HMRC will allow as it's been less than 45 days since my last car hire. What on earth is this about? Any insight would be appreciated.

MPwannadecentincome
27th November 2013, 21:24
never heard of this - who is saying client or umbrella?

arby
27th November 2013, 21:32
Umbrella - client and agency have no issue with these periodic 1 or 2 day car hire expenses.

northernladuk
27th November 2013, 22:19
Google is a wonderful thing.

Contractors' Questions: Can I claim car hire costs? :: Contractor UK (http://www.contractoruk.com/expenses/can_i_claim_car_hire_costs.html)


Reasonable car hire charges can be claimed when used solely for business during the working week. So if you are hiring a car for 7 days this is limited to 5/7ths of the cost (due to being able to claim for the working week only) and original receipts must be provided. Remember, you can only use the hire car for business. If you use it to go shopping, pick up the kids from school etc. then you could incur a taxable benefit which would involve a significant tax liability.

If you claim for car hire the amount you can claim for mileage is reduced to the cost of the fuel only. The amount you can claim depends on the fuel type of the car and engine size, but is typically around 18p per mile.

I presume they are mixing this up with the car hire for a week but business use only for 5 of the 7 days.

northernladuk
27th November 2013, 22:22
Or have a dig through this.....

BIM47750 - Specific deductions: travel & subsistence: Cars - restriction of hiring costs: Leases entered into on or after 1/6 April 2009 - short term hiring in and long term hiring out (http://www.hmrc.gov.uk/manuals/bimmanual/bim47750.htm)


Example - Hire period less than 45 days
Business B (the taxpayer) hires a car from Business H from 1 June to 10 July for £25 per day. The period of hire is 40 days. The total hire cost is £1,000. Business B meets condition A. The hire period of the car is less than 45 days so there is no restriction on the deduction for hire expenses.

Allowable deduction is £1,000.

I can't see anything about the period between hire.

stek
27th November 2013, 22:23
Are you a business or are you an employee?

Ask yourself that.

northernladuk
27th November 2013, 22:30
Clients don't half have some bloody silly policies.

northernladuk
27th November 2013, 23:02
Are you a business or are you an employee?

Ask yourself that.

Interesting question in the brolly section :)

MPwannadecentincome
27th November 2013, 23:15
Google is a wonderful thing.

Contractors' Questions: Can I claim car hire costs? :: Contractor UK (http://www.contractoruk.com/expenses/can_i_claim_car_hire_costs.html)



I presume they are mixing this up with the car hire for a week but business use only for 5 of the 7 days.

Well that would explain the way they have calculated the car rental costs - the fuel should have been based on actual business miles.


I had not seen the other bit about the 18p per mile - my accountant didn't tell me about that I will have to dig further!

EDIT: Ah found that the 18p per mile is related to allowed mileage on company cars....

http://www.hmrc.gov.uk/cars/advisory_fuel_archive.htm

northernladuk
27th November 2013, 23:30
Well that would explain the way they have calculated the car rental costs - the fuel should have been based on actual business miles.

It doesn't to me. He hasn't hired it for a week from what I can see and they are saying the 5/7ths are to do with the less than 45 days which is a different rule and incorrect. They seem to have taken business use only, thrown in a soupçon of car hire rules, mixed it in to a mess and then served it cold to the OP. Bit of mess that one... Unless I have missed something which is highly likely. Mistress LisaContractorUmbrella will be along shortly to tell me I need some correction. :p

stek
28th November 2013, 07:16
Interesting question in the brolly section :)

Soz, not always clear where you are on Tapatalk!

LisaContractorUmbrella
28th November 2013, 08:13
I work for a client who occasionally asks me to attend meetings at one of his facilities 125 miles away. Their expense policy is to only permit personal vehicle use for journeys less than 80 miles round-trip and to use a hire car for anything longer. So I hire a car through their arrangement with Avis on my personal credit card and then submit an expense claim to my agency which as been signed by a director within the client's management team. The agency pays my umbrella company the values ex VAT and the umbrella company treats this like my weekly salary so I claim the same expenses to the umbrella company to recover the VAT and tax and NI. This has worked fine 5 or 6 times since my contract started in April.

However, with my most recent hire car claim they have only paid 5/7s of the hire car and fuel value as they're saying that's all HMRC will allow as it's been less than 45 days since my last car hire. What on earth is this about? Any insight would be appreciated.

The first thing I would say is that, if I understand what you have said correctly, the way that the expenses have been dealt with by your umbrella company is a little strange. As the client is reimbursing the cost of the hire car to you, this should be included on the invoice submitted by your umbrella company and then processed as a chargeable expense when payment is made to you. What you seem to be saying is that the client pay the expense, less the VAT, and this is processed as a salary payment which is subject to tax and NI; you then enter the cost of the expense again, through the umbrella company, and it is processed as a non-chargeable expense upon which you receive tax relief?

With regard to the 45 days - all I can find is that tax treatment changes once a hire of a car exceeds 45 days but I don't know of any rule which states you cannot hire a vehicle twice within 45 days. If you have hired the car for 7 days but only used it for business travel for 5 days then you would only be entitled to tax relief on 5/7th's of the associated costs.

HTH

LisaContractorUmbrella
28th November 2013, 08:18
It doesn't to me. He hasn't hired it for a week from what I can see and they are saying the 5/7ths are to do with the less than 45 days which is a different rule and incorrect. They seem to have taken business use only, thrown in a soupçon of car hire rules, mixed it in to a mess and then served it cold to the OP. Bit of mess that one... Unless I have missed something which is highly likely. Mistress LisaContractorUmbrella will be along shortly to tell me I need some correction. :p

:laugh:laugh Not sure you're far off this time NLUK

arby
28th November 2013, 09:17
The first thing I would say is that, if I understand what you have said correctly, the way that the expenses have been dealt with by your umbrella company is a little strange. As the client is reimbursing the cost of the hire car to you, this should be included on the invoice submitted by your umbrella company and then processed as a chargeable expense when payment is made to you. What you seem to be saying is that the client pay the expense, less the VAT, and this is processed as a salary payment which is subject to tax and NI; you then enter the cost of the expense again, through the umbrella company, and it is processed as a non-chargeable expense upon which you receive tax relief?

That's correct. In my case there's the client (a large multinational), the agency that they hired me through and the umbrella company. A director at the client signs my time sheet and expense claims. I send them to the agency. The agency pays the umbrella my salary and my expense claims ex VAT. The umbrella treats the entire payment as subject to tax and NI and deducts accordingly. The way I reclaim the tax and NI and VAT on the expense is to submit the expense receipts to the umbrella as well so I recover the tax and the NI and the VAT that was deducted.

The umbrella company is Paystream.

DirtyDog
28th November 2013, 09:47
The expense policy of the client and the agency are irrelevant here - the only one that matters is the expense policy of your employer.

If their policy said that they paid no expenses at all on hire cars, you'd get nothing because that is what your employer's policy dictates.

So you need to speak to your employer and get a copy of their policy so this doesn't catch you again.

LisaContractorUmbrella
28th November 2013, 11:27
That's correct. In my case there's the client (a large multinational), the agency that they hired me through and the umbrella company. A director at the client signs my time sheet and expense claims. I send them to the agency. The agency pays the umbrella my salary and my expense claims ex VAT. The umbrella treats the entire payment as subject to tax and NI and deducts accordingly. The way I reclaim the tax and NI and VAT on the expense is to submit the expense receipts to the umbrella as well so I recover the tax and the NI and the VAT that was deducted.

The umbrella company is Paystream.

I think you may be losing out here - your original outlay was, say, £120.00.
£100 is paid to you on top of your salary and is therefore subject to deductions for tax and NI contributions - for arguments sake £30.00. So you have lost £20.00 as the VAT element of the expense was not paid and then another £30.00 through tax and NI
You then claim tax relief through your umbrella company on the original £120.00 which would be £24.00
Based on these very rough calculations you are losing out to the tune of about £26.00

That is if I have understood correctly.

arby
28th November 2013, 12:54
The expense policy of the client and the agency are irrelevant here - the only one that matters is the expense policy of your employer.

If their policy said that they paid no expenses at all on hire cars, you'd get nothing because that is what your employer's policy dictates.

So you need to speak to your employer and get a copy of their policy so this doesn't catch you again.

The published policy is quite clear "The cost of hiring a car can be reclaimed providing it is for business purposes. If it is a short term lease (less than 45 days) you will need to provide the lease receipts and petrol receipts. If it is a long term lease, please contact our Customer Care team for more advice. Please note, car hire cannot be claimed in conjunction with a mileage claim for the same vehicle."
They seem to be implementing a rather bizarre interpretation - that multiple sporadic and independent car hires of 1 or 2 days in duration constitute a long term lease. I've had 7 car hire days over 6 rentals between late July and now. Their intrangience so far at providing a rationale for their undocumented (and unsubstantiated) intrepration of their own policy is rather frustrating.

arby
28th November 2013, 13:02
I think you may be losing out here - your original outlay was, say, £120.00.
£100 is paid to you on top of your salary and is therefore subject to deductions for tax and NI contributions - for arguments sake £30.00. So you have lost £20.00 as the VAT element of the expense was not paid and then another £30.00 through tax and NI
You then claim tax relief through your umbrella company on the original £120.00 which would be £24.00
Based on these very rough calculations you are losing out to the tune of about £26.00

That is if I have understood correctly.

I will need to check a previous claim in detail but I was told that the tax and NI deducted were recovered when I claimed tax relief from the umbrella company and that the VAT was also repaid.

LisaContractorUmbrella
28th November 2013, 13:09
I will need to check a previous claim in detail but I was told that the tax and NI deducted were recovered when I claimed tax relief from the umbrella company and that the VAT was also repaid.

Did you provide your umbrella company with the receipts or did they go to your client?

arby
28th November 2013, 15:22
Did you provide your umbrella company with the receipts or did they go to your client?
I provide copies of the VAT receipts to the umbrella company as part of my claim.

LisaContractorUmbrella
2nd December 2013, 08:07
I provide copies of the VAT receipts to the umbrella company as part of my claim.

If that's the case then the umbrella company will be claiming the VAT element of the expenses through their VAT return so I would imagine that they are processing the full value of the expense i.e. including VAT to you??

arby
2nd December 2013, 08:43
If that's the case then the umbrella company will be claiming the VAT element of the expenses through their VAT return so I would imagine that they are processing the full value of the expense i.e. including VAT to you??

Yes.

LisaContractorUmbrella
2nd December 2013, 11:19
Yes.

I am still not quite sure how all this is working Arby and I think you may still be losing out as I cannot see how the full value can be 'reimbursed' to you - I think that you will only be receiving tax relief on the full value.

arby
2nd December 2013, 12:07
I am still not quite sure how all this is working Arby and I think you may still be losing out as I cannot see how the full value can be 'reimbursed' to you - I think that you will only be receiving tax relief on the full value.

What do you think I'm losing out on - recovering the VAT or the NI or both?

LisaContractorUmbrella
2nd December 2013, 13:10
What do you think I'm losing out on - recovering the VAT or the NI or both?

Well you are paying tax and NI on the amount that's been paid by the agency (the expense value less VAT) as it's being treated like salary and then you are only getting tax relief on the value of the expense when it is paid as a non-chargeable expense through the umbrella company. I did some rough calculations for you in a previous post - take a look at those - if you're still concerned PM me the figures on your payslip and I'll have a more detailed look for you

arby
3rd December 2013, 19:25
PM sent.

arby
17th December 2013, 08:07
An update: the umbrella has reconsidered their interpretation of HMRC's guidelines as my rentals are indeed short, sporadic/occasional and I submit personal mileage reimbursements every week and so they provided tax relief on the missing 2/7s and will provide full tax relief on future rentals of the same nature. They have also acknowledged that they have not be reimbursing me the VAT as previously promised and will be reconciling that as well. So I think I'm no longer out of pocket.

I've learned a fair bit along the way and used it to create a spreadsheet where I can calculate the employer's and employee's NI as well as the PAYE due in order to check that I'm not out of pocket.

Thanks for all the help and special thanks go to Lisa for her help here, via PMs and via emails. She really went above and beyond the call of duty for me. Thank you.

MPwannadecentincome
17th December 2013, 17:20
An update: the umbrella has reconsidered their interpretation of HMRC's guidelines as my rentals are indeed short, sporadic/occasional and I submit personal mileage reimbursements every week and so they provided tax relief on the missing 2/7s and will provide full tax relief on future rentals of the same nature. They have also acknowledged that they have not be reimbursing me the VAT as previously promised and will be reconciling that as well. So I think I'm no longer out of pocket.

I've learned a fair bit along the way and used it to create a spreadsheet where I can calculate the employer's and employee's NI as well as the PAYE due in order to check that I'm not out of pocket.

Thanks for all the help and special thanks go to Lisa for her help here, via PMs and via emails. She really went above and beyond the call of duty for me. Thank you.

Awww shuck nice to see a happy outcome! :happy Merry Xmas!

LisaContractorUmbrella
18th December 2013, 08:26
Glad it all got sorted Arby - thanks for your kind words :happy

pespro
16th January 2014, 19:21
Sorry to tag on to the end of this thread. I have a question regarding car hire expenses for a future role.

I will be hiring a car. The options i was explained was to either claim the costs back of hire and get a reduced rate of mileage. I thought it was 25p but looks like 18p. Or claim 45p per mile and not claim the car hire costs.

The first problem is the client is going to be paying mileage between sites at around 60p per mile. I asked regarding claiming for this and then for travel from sites to my home at the reduced rate and was told its ok and not to worry about this.

In my eyes it looks like the client will be paying me mileage for some journeys and i would get tax relief on the journey to and from work by claming the mileage via the umbrella. Is that how it works and is all legal?

I then asked do i only get 20% back of the hire costs as this is VAT so if the hire cost per week was £100 i would only be able to put £20 to my allowance to pay less tax. I was told no, its the full amount divided by 7 and multipled by 5 to get the 5 out of 7 rule which was linked earlier on this thead. So £71 per week?

Finally i have seen in this thread about the 45 day rule. I cant find anything with google on this. The hire company say they do a 28 day lease, then the car has to return and then is sent out again. Does this mean i am ok with this. Effectively hiring a car for 28 days at a time...

LisaContractorUmbrella
17th January 2014, 07:46
There's a reference to 45 days here: http://www.hmrc.gov.uk/briefs/company-tax/bim47700.pdf under BM47750 but I believe this applies to businesses and not to an employee working through an umbrella company

moggy
17th January 2014, 14:59
An update: the umbrella has reconsidered their interpretation of HMRC's guidelines as my rentals are indeed short, sporadic/occasional and I submit personal mileage reimbursements every week and so they provided tax relief on the missing 2/7s and will provide full tax relief on future rentals of the same nature. They have also acknowledged that they have not be reimbursing me the VAT as previously promised and will be reconciling that as well. So I think I'm no longer out of pocket.

I've learned a fair bit along the way and used it to create a spreadsheet where I can calculate the employer's and employee's NI as well as the PAYE due in order to check that I'm not out of pocket.

Thanks for all the help and special thanks go to Lisa for her help here, via PMs and via emails. She really went above and beyond the call of duty for me. Thank you.

After all this i assume you will signing with Contractor Umbrella? after all Lisa corrected your present umbrellas mistake.. I wouldn't be staying put..