Agency Worker, rolling contract for almost 2 years..HELP!

m4ndy1966

I have been an agency worker for a few years now but my current work placement started off for 3 months and has rolled on from there to date, I will have been at the same work placement for 2 years at the end of May 2011.

I am currently with an umbrella company (Giant) who I pay a fee to sort out my tax/insurance etc. I am able to claim mileage to and from work place and subsistence.

Now I have been informed that once I have been at the same work placement for 2 years I will face changes which will mean I wont be able to claim the mileage and subsistence. Is this true?

Would I be better changing to a limited company then? now?

I really dont understand it all, please help!

System

It will make no difference as it will still be classed as a permanent place of employment and you will lose the perk of being able to claim subsistence & travel to work.

m4ndy1966

So what about changing to PAYE?

System

If you know now that you will still be working there past the 2 year point then you must stop claiming travel to work and subsistence now. Going PAYE will not change anything.

http://www.hmrc.gov.uk/manuals/eimanual/eim32000.htm covers agency work, 24 month limit etc.

m4ndy1966

Thanks !!!!!!, it is not a given thing that I will be working there past the 2 year point, I am currently working month to month but I am aware that the end of May will shortly be here and I wasnt aware until this week that this 2 year thing even existed, so now as you can see I am very concerned and dont know what to do for the best

taxsaver

it is worth noting that these HMRC rules do NOT mean that you can no longer claim or be paid mileage and subsistence, but it DOES mean that they will be treated as income and subject to income tax and national insurance.

m4ndy1966

taxsaver wrote: »

it is worth noting that these HMRC rules do NOT mean that you can no longer claim of be paid mileage and subsistence, but it DOES mean that they will be treated as income and subject to income tax and national insurance.

Sorry to sound thick (but I am when it comes to this kinda thing!) but what exactly does that mean?

System

It means that you end up paying tax on the mileage and subsistence that you are claiming tax relief on. In other words you will end up making your tax situation more complex for absolutely no reason.

katsu

M4ndy - you are already on PAYE working for giant. Giant are your employer, so you are taxed as an employee by them.

The 2yr rule is an HMRC rule so after the 2yrs giant will not pay you the mileage rate or subsistence (you can look at their expenses policy to confirm this). You could look into setting up your own LTD co but you would need advice on that as there are costs to it - could cost you £1k in your first year to get the accountant, buy the ltd co etc. Spread over a year it would possibly be better value than your giant fees if you are going to keep temping for a few more years but you would need tax advice about whether you could pay yourself the mileage etc (!!!!!!'s post suggests not) and you would need to use an accountant to do some of stuff you currently pay giant for, so it would be more complex arrangements without necessarily making you much better off.

Changing from giant to another umbrella company will not help as it is the fact you've been working there for 2 yrs that will stop another umbrella paying you mileage and subsistence too. They would be likely to ask you about that when setting you up.

To keep getting mileage and subsistence you really need to get a new work placement at the 2 year point. Sorry.

taxsaver

My point was that this HMRC rule does not give your employers an excuse to stop paying you the expenses that you incur, so be careful that they don't use the HMRC rules as an excuse to save themselves money.

However, where at the moment you get paid all your expenses in full without any deductions, after the 24 months Giant would have to deduct tax and national insurance from your expenses before paying them to you just as they do with your salary.

I hope that clarifies things and is helpful to you.

System

The employer isn't paying mileage & subsistence. Giant, as with most umbrellas, allow you to log this as expenses thus getting tax relief on it.