Business Expenses - How to manage?

sudgolf

First post here.
I have recently changed jobs and in my new role I find myself out on the road visiting customers on a weekly basis. For most people in the company who this is not a regular occurrence for they simply submit an expenses claim each month and the money is paid.

Given that I will be on the road a fair bit the company are going to be giving me a £500 cash advance in my salary. When expenses are used each month I would submit a claim as normal and that amount is then paid to me at the end of the month ontop of my salary to re-fill the balance of £500.

Now, Ideally I do not want this money to sit in my normal current account so I am looking at what the best way would be to manage this. I am cautious of using a credit card due to balance transfer fees, leaving me out of pocket (albeit a small amount but it all matters). I could open up a secondary current account with my current bank which would help with transferring of funds but looking for some advice / opinions on how best to manage this moving forward.

Appreciate your help.

msallen

I don't see how balance transfer fees come into this ?

I simply use a credit card and then claim at the appropriate time. Sometimes I end up having to cover the costs myself for a few days if the CC payment is due before my expenses are paid. I have sufficient float in my current account for this not to be an issue, but if you don't then I guess that's what the advance is for.

trailingspouse

Not sure why you wouldn't want this to be in your normal current account? You seem to be making a simple situation unnecessarily complicated.

It's not that common to be given an advance to cover expenses, so you're ahead of the game there.

Just tot up your expenses, submit receipts, and have done. If you pay by credit card you reduce the amount of time you will be out of pocket (but you're not going to be out of pocket anyway, because of the £500 advance).

Nebulous2

I can understand why you would want to keep that separate from your normal account.

I'd try to use it to my advantage. A bit complicated but - start a new current account. Set-up a couple of direct debits on it if necessary. Switch to a current acount paying a bonus. Nationwide refer a friend would be one possibility, giving you and your friend £100 each. Apply for a new credit card. Nationwide offered me one without applying when I applied for my current account and it pays 0.5% cashback. Alternatively dedicate an existing cleared one to use for expenses.

Pay your £500 into the Nationwide account.

You now pay all your expenses on the credit card, which gets paid off every month from the separate current account. You have gained £100, plus a bit of cashback, plus some interest on your float on a monthly basis.

Make sure you meet the monthly pay-in requirement to keep getting the 5% interest.

simongregson

Stick the £500 in an instant access savings account with your bank/another bank.

Pay all your expenses by credit card, preferably one that earns rewards

Put in your expenses claim, when it is paid then pay off the credit card bill.

If the credit card bill becomes due before you get your expenses back then pay the bill using your £500 advance, but when you do get the money back then transfer it to the savings account so that it is topped back up to £500.

This will mean you are not tempted to spend the £500 which you would obviously need to return to your employer were you to change job or stop travelling regularly.

cloud_dog

I use two credit cards (specifically for business expenses), with cut-off dates approx 2 weeks apart, and I use which ever has just 'ticked over' the cut-off date. That way I always know that I will be reimbursed my expenses before the CC payment is due.

JuicyJesus

I've got no opinion on any banking facilities for this arrangement but it seems like an absolute nightmare for taxation purposes.

k3lvc

JuicyJesus wrote: »

I've got no opinion on any banking facilities for this arrangement but it seems like an absolute nightmare for taxation purposes.

Why ?

Employee incurs legitmate business expenses
Employer reimburses legimate business expenses
No tax liability/complications to Employee*

*with the potential exception of tax rebate on business mileage depending on method of reimbursement/car etc

I've been doing this for last 20yrs with up to £50k pa of 'expenses' and not had a single query - even to the point of no longer having to complete a tax return

cloud_dog

Would the £500 payment be treated as a BIK? As opposed to repayment of incurred expenses?

JuicyJesus

k3lvc wrote: »

Why ?

Employee incurs legitmate business expenses
Employer reimburses legimate business expenses
No tax liability/complications to Employee*

*with the potential exception of tax rebate on business mileage depending on method of reimbursement/car etc

I've been doing this for last 20yrs with up to £50k pa of 'expenses' and not had a single query - even to the point of no longer having to complete a tax return

Being reimbursed for expenses that have already taken place (through a company credit card or similar) is one thing, and is how it works generally. Having a cash advance for business expenses that is then topped up by the employer when they're incurred but is otherwise held by the employee and the employee can do whatever they want with otherwise (the OP could immediately go and blow it on whatever he wants as far as the employer knows), settled up through payroll, is a bloody weird way of doing things.

I'm not a tax adviser or accountant but that was my first thought on reading the OP.

k3lvc

OK - maybe the float complicates matters - last time our company used floats was in 1980's