Self employed sole trader - can you claim for meals/NIC

thriftytracey

After being unemployed for a year my hubby started getting an odd day here and there doing QA inspection work. He now has a full time three month contract. The agency he gets the work from treat him as self employed and pay him gross. He is going to set up a business account and inform the Revenue that he is self employed. I understand he can claim for mileage to and from his place of work. My question is - can he claim a daily meal allowance? He commutes daily so doesn't incur any other subsistence costs. Also, how does he pay his Self employed NIC? He has been there 2 weeks.

Thanks for any advice.

chrismac1

Firstly is he genuinely or "falsely" self-employed?

1. Who has direction and control over the time of work and way the work is done?
2. Can he nominate a substitute to carry out the contract?
3. Is there an ongoing offer and acceptance of work? If he suddenly gets a short-term offer on double the money for a week, can he freely accept this, for example?

There are other tests, PM me if you want more details.

If he really is self-employed, then presumably his place of business will be your home. If so, he can claim:

1. Mileage to his customers.
2. Some expenses for use of own home if he uses that for admin. etc - again PM me for more details.
3. For meals when he is on an overnight stay away from home, but not otherwise.
4. For various other expenses you have not mentioned but may not realise he can claim. (PM me for more)

All of this hinges on him being genuinely self-employed. Failing this, all of the above can't be claimed and he will have a big potential bill for PAYE and NI too. To register as self-employed, he should go to the HMRC site and follow the links for "self-employed" and ask for a 10-digit UTR number.

thriftytracey

Hi ChrisMac1,

Thannks for replying. In answer to your questions:-

1. The answer to that is the company he is working for (who pay the agency, who then pay him the gross amount - they do not deduct tax or NIC).
2. No, if he was unable to work then presumbly the agency would find another individual to work there.
3. The work could end at any time or could be extended. Either party could terminate. There is no contract as such.

When he last worked he was an IT contractor and used an Umbrella company. They paid him a very low hourly rate plus a "payment" and allowed mileage and subsistence (meal allowance) even when he was working locally. I realise the above circumstances are different and it is difficult to know what to do. If he does nothing i.e. does not open a business account, register as self employed then presumably he would declare these earnings on his annual tax return but be able to claim back mileage? I don't know about meals. Some of his colleagues who work on the same basis say they have set up as sole trader and claim back mileage and meals.

olly300

ellanutella wrote: »

Hi ChrisMac1,

Thannks for replying. In answer to your questions:-

1. The answer to that is the company he is working for (who pay the agency, who then pay him the gross amount - they do not deduct tax or NIC).
2. No, if he was unable to work then presumbly the agency would find another individual to work there.

What does his contract say about finding someone? It it his responsibility or the agency's? Or will the agency do that on his behalf?

ellanutella wrote: »

3. The work could end at any time or could be extended. Either party could terminate. There is no contract as such.

When he signed on with the agency he must have signed a contract? As he got a copy of it? If not, then he should ask in writing for a copy of the contract. The agency has to provide it by law.

ellanutella wrote: »

When he last worked he was an IT contractor and used an Umbrella company. They paid him a very low hourly rate plus a "payment" and allowed mileage and subsistence (meal allowance) even when he was working locally.

There the umbrella company was the employer so they could do what they like (as long as it was legal) in terms of subsistence expenses when he was away from his permanent work location.

ellanutella wrote: »

I realise the above circumstances are different and it is difficult to know what to do. If he does nothing i.e. does not open a business account, register as self employed then presumably he would declare these earnings on his annual tax return but be able to claim back mileage? I don't know about meals. Some of his colleagues who work on the same basis say they have set up as sole trader and claim back mileage and meals.

Sole traders are treated differently.

You can claim mileage if your place of work is temporary work place, but you can't claim normal meals.

If your husband becomes an temp, then he won't be able to claim his mileage as that place is his normal place of work.

Personally I'm surprised that the agency hasn't forced your husband to use an umbrella company or gone PAYE on their books. There is more risk for them having sole traders.