Travel expenses while employed abroad

MoonDragon

Hi all,

I have worked for 5 months as an employee of an oversea company and was leaving in hostels for this purpose.

I would like to know how much travel expenses I can deduct from the income tax.

Ps : It will be really useful if someone could explain how to use the 'scale rate expenses" (at this page : http://www.hmrc.gov.uk/employers/emp-income-scale-rates.htm )

agrinnall

I can't explain it but that's a page for employers, not employees, so I'm not sure it will have any direct relevance to you. I'm doubtful if you can claim anything against tax, employees can't normally claim their living expenses. Why wasn't your employer paying for your accommodation?

MoonDragon

In fact it is for my limited company (=my employer) when I was working abroad as a contractor.

cotswoldaccountant

Your P11D for 2011-12 will include details of any travel expenses you have received from the limited company as its employee, unless your limited company has a dispensation which means they do not need to report these items on the P11D.

If there are travel expenses on the P11D, you will include these on your tax return in the "employment" section - there is a box to incude expense payments received. You then make an equal for expense payments incurred as part of your employment, which avoids any tax being charged on these expense payments.

I presume the limited company did pay for your travel expenses during the time you were working abroad?

The page you have linked to is talking about Scale Rate payments - effectively an allowance which an employer may make to an employee who travels abroad to cover subsistence expenses incurred. HOWEVER this only applies where the employer (i.e. the limited company) has applied for a dispensation to allow these "scale rate payments" to be paid, and not included on the annual P11D. It's not a payment that anyone can just choose to claim. If the limited company does not have such a dispensation, then travel expenses are usually reimbursed (and included on the P11D) based on the actual amount incurred, supported by receipts.

cotswoldaccountant

I should add that if your limited company is actually based overseas (rather than being a UK company), then the advice received on this forum is unlikely to be relevant as most contributors have knowledge of UK, rather than overseas, tax laws.

But perhaps you mean that you were an employee of your own limited company and you, as an employee of the limited company, were working for one for one of the company's clients abroad.

trailingspouse

If you're working as a contractor and have your own limited company, then the travel expenses don't come out of income tax - you pay for flights, hotels etc etc directly from the business as these are direct business expenses. Any payments received from clients (your daily rate, and anything they might pay towards your travel) go into the limited company accounts, expenses are paid directly from there, and you pay yourself a salary/dividend as appropriate.

Running a ltd co is a complex business, and I would seriously suggest you use an accountant. Totally worth it as they keep you right, know about stuff you wouldn't even know to ask about, and generally reduce the stress.

Cook_County

Was your company liable to income tax, VAT, corporate tax or withholding taxes in the foreign country where you worked on it's behalf? If not, why not?