New to Contracting - Accommodation expenses ?
Discussion
After over two years of unemployment I have finally landed a contract which is winging its way to me. I’ll be joining an umbrella company and, as the office is a few hundred miles away, I’ll need to find accommodation. I was hoping that someone could help and tell me if I can claim partially, in full or offset against tax, any money I fork out for a roof over my head for three, four or five nights a week.
Any help and guidance is appreciated and many thanks in advance.
Any help and guidance is appreciated and many thanks in advance.
Not with them at the mo as taking some me time, thanks anyway.
As long as your agency has used them before you will be fine, setup for me was very quick. IIRC any overnight stay less than £45 didn't need receipts to claim (keep em anyway, just saves you posting them off each month)
re staying away, when you find a decent place, stick with it! Unsure where you will be but I look out for farmhouse B&Bs, they are so much better than most places & you usually get a decent feed in the morning, plus parking is usually safe and private. Also you can usually get a deal if you book up weeks at a time, usually a £5er or so off each night but it all helps when its your money!
http://www.farmstay.co.uk/
As long as your agency has used them before you will be fine, setup for me was very quick. IIRC any overnight stay less than £45 didn't need receipts to claim (keep em anyway, just saves you posting them off each month)
re staying away, when you find a decent place, stick with it! Unsure where you will be but I look out for farmhouse B&Bs, they are so much better than most places & you usually get a decent feed in the morning, plus parking is usually safe and private. Also you can usually get a deal if you book up weeks at a time, usually a £5er or so off each night but it all helps when its your money!
http://www.farmstay.co.uk/
Eric Mc said:
Are you being taxed as an employee? In other words, are you having PAYE and NI deducted on the income you receive?
Hi Eric. I'll effectively become an employee of the umbrella company. They will have a contract with the client, invoicing them on receipt of my timesheets and I will have a contract with Parasol. I will receive a salary with PAYE, NI and their fees deducted or at least that's my understanding. I'm sure I'd be far better off as a limited company but I always break into a cold sweat at the sight of a form and I develop arrhythmia simply being in the same room as a brown envelope. How come the HMRC allow contractors to claim the cost of accomodation but don't allow employees to claim similar things?
I appreciate that in theory contractors should be covered by IR35, but in reality every contractor I've known works for the same company, in the same location, at the same desk and the same hours for usually around six months minimum, yet all of them either have their own limited company or work under an umbrella company such as Parasol.
I appreciate that in theory contractors should be covered by IR35, but in reality every contractor I've known works for the same company, in the same location, at the same desk and the same hours for usually around six months minimum, yet all of them either have their own limited company or work under an umbrella company such as Parasol.
I'm not sure they really do differentiate.
They do allow travel costs for up to two years on any one assignment. After that it is deemed to be permanent place of work and part of the "normal commute" and therefore not tax relieveable.
If an employee incurs costs that are incured wholly, excluisvely and NECESSARILLY in the course of his/her employment, then those costs CAN be claimed as costs against the employee's taxable income. This would include accommodation costs as long as the EMPLOYEE had to incur them and pay for them out of his/her own pocket.
This general rule applies to all employees whether they are full time, part time, temps, contractors etc.
They do allow travel costs for up to two years on any one assignment. After that it is deemed to be permanent place of work and part of the "normal commute" and therefore not tax relieveable.
If an employee incurs costs that are incured wholly, excluisvely and NECESSARILLY in the course of his/her employment, then those costs CAN be claimed as costs against the employee's taxable income. This would include accommodation costs as long as the EMPLOYEE had to incur them and pay for them out of his/her own pocket.
This general rule applies to all employees whether they are full time, part time, temps, contractors etc.
Edited by Eric Mc on Thursday 17th November 13:22
CzechItOut said:
How come the HMRC allow contractors to claim the cost of accomodation but don't allow employees to claim similar things?
I appreciate that in theory contractors should be covered by IR35, but in reality every contractor I've known works for the same company, in the same location, at the same desk and the same hours for usually around six months minimum, yet all of them either have their own limited company or work under an umbrella company such as Parasol.
Or looking at the same situation from the other direction... you could just as well ask why don't contractors get holiday and sick pay?I appreciate that in theory contractors should be covered by IR35, but in reality every contractor I've known works for the same company, in the same location, at the same desk and the same hours for usually around six months minimum, yet all of them either have their own limited company or work under an umbrella company such as Parasol.
Two different ways of meeting staffing requirements, each have their pros and cons.
ewenm said:
CzechItOut said:
How come the HMRC allow contractors to claim the cost of accomodation but don't allow employees to claim similar things?
I appreciate that in theory contractors should be covered by IR35, but in reality every contractor I've known works for the same company, in the same location, at the same desk and the same hours for usually around six months minimum, yet all of them either have their own limited company or work under an umbrella company such as Parasol.
Or looking at the same situation from the other direction... you could just as well ask why don't contractors get holiday and sick pay?I appreciate that in theory contractors should be covered by IR35, but in reality every contractor I've known works for the same company, in the same location, at the same desk and the same hours for usually around six months minimum, yet all of them either have their own limited company or work under an umbrella company such as Parasol.
Two different ways of meeting staffing requirements, each have their pros and cons.
Don't confuse tax treatment with NI treatment with employment legislation with health and safety legislation with sick pay/maternity pay rights etc etc.
In many cases, defining who or what an employee is can vary depending on which type of legislation you are looking at.
Eric Mc said:
I'm not sure they really do differentiate.
They do allow travel costs for up to two years on any one assignment. After that it is deemed to be permanent place of work and part of the "normal commute" and therefore not tax relieveable.
If an employee incurs costs that are incured wholly, excluisvely and NECESSARILLY in the course of his/her employment, then those costs CAN be claimed as costs against the employee's taxable income. This would include accommodation costs as long as the EMPLOYEE had to incur them and pay for them out of his/her own pocket.
This general rule applies to all employees whether they are full time, part time, temps, contractors etc.
Interesting, thanks. I wasn't aware of that.They do allow travel costs for up to two years on any one assignment. After that it is deemed to be permanent place of work and part of the "normal commute" and therefore not tax relieveable.
If an employee incurs costs that are incured wholly, excluisvely and NECESSARILLY in the course of his/her employment, then those costs CAN be claimed as costs against the employee's taxable income. This would include accommodation costs as long as the EMPLOYEE had to incur them and pay for them out of his/her own pocket.
This general rule applies to all employees whether they are full time, part time, temps, contractors etc.
Edited by Eric Mc on Thursday 17th November 13:22
The key word is NECESSARILLY.
If an employee CHOOSES to take a course of action which results in him/her having to pay out of pocket expenses, those costs CANNOT be claimed as they came about due to a CHOICE exercised by the employee. In other words, they fail the "necessarilly" test.
So, if your boss says you MUST stay on site during the week, then the accommodation costs will be claimable. In such circumstances, it is far more normal for the employer to meet these costs rather than the employee.
If YOU decide it would be more convenient to stay on site and therefore pay some accomodation costs as a result, then you will NOT be able to claim for those costs.
If an employee CHOOSES to take a course of action which results in him/her having to pay out of pocket expenses, those costs CANNOT be claimed as they came about due to a CHOICE exercised by the employee. In other words, they fail the "necessarilly" test.
So, if your boss says you MUST stay on site during the week, then the accommodation costs will be claimable. In such circumstances, it is far more normal for the employer to meet these costs rather than the employee.
If YOU decide it would be more convenient to stay on site and therefore pay some accomodation costs as a result, then you will NOT be able to claim for those costs.
this link might help, iv been contracting for over 2 years now but have never claimed anything as didnt think i was eligible, silly me! thinking of working away after xmas and have been recommended this firm by several other contractors
http://www.danbro.co.uk/our_services/umbrella_comp...
http://www.danbro.co.uk/our_services/umbrella_comp...
CzechItOut said:
So how would the original poster be able to claim his accommodation costs, based on the fact he is choosing to live closer to work, rather than commute the 100 or so miles to his office?
Is it not because he is now self employed?I'm a contractor and am able to claim accommodation/subsistence/travel as I am working away from my normal place of residence (I commute 400 miles each way, each week). Thus it's a tax deductable expense, the same as if you went traveling to another office at your work. When you travel for work you are able to claim for the same things but normally your company pays and then claims this as an expense. It's just that I've chosen to operate in a self employed capacity and run my own business.
(I hope I've got that right but am sure someone will pull me up on any errors)
Just out of interest OP, why have you not gone down the Ltd company route? Did it not fit in with your plans?
Eric Mc said:
He is not running his own company. Therefore, any expense claims he might want to make must satisfy the far more tringent "employee" rules rather than the less restrictive "trading" rules.
I'm glad you're here Eric 
The whole thing is so confusing for anyone that's non accountant related!From what I can gather the whole umbrella thing has changed a fair bit over the years (although that's no excuse for my ignorance LOL).
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