Contracting Expenses - Who pays them?

JamesFuller

Hi all,

I am helping a friend who is new to contracting and potentially getting a contract soon.

He is setting it up as a Ltd company and the contract is outside IR35.

He has to travel roughly 200 miles by their own car a day in total.
Potentially stay in a hotel costing £120 a night x 2 a week.
Lunch is about £5 a day

Who pays for these expenses? Does HMRC pay them? Do they pay back this in full?

gettingtheresometime

Why would HMRC pay his expenses?

why wouldn't the company that he is setting up pay them?

JamesFuller

Exactly, so ultimately these expenses are coming out of their own pocket?

Edit: I don't understand this myself so I ask.

Reckless_Saving

HMRC won't pay your mates expenses, we have contractors who work in our office, they foot their travel/accommodation costs themselves - it's why day rates for contractors tend to be higher to attract people temporarily from the other end of the country. If we want them to go to another of our office bases then we allow them to have their company invoice their addition costs so long as it aligns with companies expenses policy.

There's will be things that they can claim as business expenses in whole or part but I don't know what these are, just know some of our contractors put things like subscriptions through the business, they were reliant of having a good accountant to advise on what they could/couldn't class as an expense.

TELLIT01

The rate he is charging the company he is doing the work for needs to cover all his incidental expenses.

happyandcontented

They will come off the gross income though, before the figure for tax is arrived at.

JamesFuller

Is there a calculator that can help with this?

Let's say the rate is £500 a day x 260 days for an annual contract.
Mileage would be 30,000
Food annually is £4,000
Hotel accommodation may be £10,000 a year.
Outside IR35

What would be the income roughly with all those expenses?

Thank you for helping I am learning this myself as well.

happyandcontented

I think mileage is 45p per mile. The rest comes off as is, with limits on food I think.

xapprenticex

200 miles per day, doesnt sound fun

gettingtheresometime

happyandcontented wrote: »

I think mileage is 45p per mile. The rest comes off as is, with limits on food I think.

Isn't it 45p per mile for the first 10k and then 25p per mile thereafter?

If he earns 45p for anything over 10k miles, it becomes taxable.

Best advice I'd give your mate is to get himself a good accountant who will advise him the best way of doing things

JamesFuller

Thank you happyandcontented

Food is generally breakfast, lunch, dinner if far away. And only lunch if near.

So I suppose this depends on the typical place of work? Let's say you are normally expected to work on customer office 100 miles away from home for about 4 days a week.

Is it possible to expense breakfast and lunch?

And if you are say 400 miles away from home and staying in a hotel, can you claim breakfast, lunch, and dinner?