Contracting question: Can I claim hotel and dinner expense for 6 month contract?

MataNui

Kokolot wrote: »

Hi,

I am still getting my head around expenses with my LTD company.

Is expenses such as hotel, lunch, dinner, breakfast good in making savings in taxes?

I am trying to understand whether it's better to claim expenses in stopping the tax man getting it, or whether it's better to claim less as you can because it is more money in your pocket?

Please explain.

Thats answered in an easy sum. Whats better out of having £100 in your pocket or 20% of £100 in your pocket? Its always better to NOT spend the money in the first place. All being able to claim it as an expense does is save the tax you would pay on that (20%).

motorguy

bugslet wrote: »

If I understand your question correctly.

Get the lowest accommodation costs possible, along with cheapest meals to save yourself money. Whatever the costs, claim as expenses.

Thats exactly it. Ultimately while you can offset tax against it, you're better to find somewhere cheap and thus have more money in your company account.

I've been quite lucky so far. Currently i use an IBIS in Manchester thats working out at less than £50 a night. I've had some nice B&Bs for less than £40 a night around the country though.

I'd be reluctant to spend much more than that.

Conversely, my wife works for a company and generally goes for the £150-£200 a night stuff - but then theres no advantage in her not doing so.

Kokolot

Thank you

Yes so from now on I am going for the cheapest possible.

Here is a breakdown of my expenses currently:

Hotel = £50
Breakfast = £2.50
Lunch - 0 (I make it at home for a few days in advance)
Dinner = £10

It's about the same as doing a 160 mile commute everyday that I would have been doing on 45p per mile (still inside my fist 10k miles).

I am still quite new and my accountant isn't very helpful but I will ask him to clarify this too.

But I think I get what you guys are saying, it's essentially still coming out of my pocket and only getting 20% in return for the tax savings. Having low expenses is better as it is more in my pocket. Have I understood it right?

jobbingmusician

Yes except that why a hotel rather than a B & B? Isn't it worth spending a couple of quid on a local paper to see what flatshares and room lettings are out there? Or £6 or so on a book listing B & B (you could even save £6 and look here on the internet....) Better to spend £20 a night for 7 nights and not be there for 3 of them than to spend £50 a night for even 3 nights......

Slinky

motorguy wrote: »

The O/P has already told us he cant reclaim it from the client, so theres no "expensive lesson" to be learnt.

Well the lesson to be learned is that you negotiate a day rate plus expenses that the company you are doing work for pay (or more importantly for HMRC's purposes, you pay but invoice the client company for), or you check out the rates of local hotels B&Bs in advance and factor that into the day rate you quote your client.

motorguy

jobbingmusician wrote: »

Yes except that why a hotel rather than a B & B? Isn't it worth spending a couple of quid on a local paper to see what flatshares and room lettings are out there? Or £6 or so on a book listing B & B (you could even save £6 and look here on the internet....) Better to spend £20 a night for 7 nights and not be there for 3 of them than to spend £50 a night for even 3 nights......

AirBnB would be another source of cheap rooms.

motorguy

Slinky wrote: »

Well the lesson to be learned is that you negotiate a day rate plus expenses that the company you are doing work for pay (or more importantly for HMRC's purposes, you pay but invoice the client company for), or you check out the rates of local hotels B&Bs in advance and factor that into the day rate you quote your client.

I've never yet seen a contract whereby negotiating the client paying my expenses is an option. Its obviously going to make you more expensive than someone who is local down the road and i'd say most clients would find it off putting.

Likewise i negotiate my rate depending on my skills relative to the job, not based on the location.

I pitch at what i think i can get away with, frankly.

I know minimum day rate for it to be worth my while getting out of bed and its really not hard to tot up £50 a night x 4 (and usually a flight in my case as i'm based in NI) and that rarely varies by more than a few £ either way.

It does seem that the O/P is trying to minimise costs / tax burden rather than be on the back footing because he suddenly found out he has accommodation to pay.

Kokolot

This has been a learning experience for me on my first contract.

I suddenly had to leave my full-time job and found lucrative work through contracting.

And thanks to you guys I am learning about these things in more detail. Maybe you were in similar position too when you were knew and had to learn this all.

When my contract is up for negotiation I will ask for more because:

A) I am away 3 days a week
It is coming out of my expenses so from the rate there is less money in my pocket

My approach will be to ask:

A) If I can work from home 2 days a week and leave early on the day I drive back from the location (will make up the extra 2-3 hrs when I stay there for 2 days)
C) Up my rate so it meets my expenses
D) Or ask them to make my contract from home and they can pay for my hotel, subsistence, travel expenses.

And if they don't agree I will leave.

Wyndham

Kokolot wrote: »

This has been a learning experience for me on my first contract.

I suddenly had to leave my full-time job and found lucrative work through contracting.

And thanks to you guys I am learning about these things in more detail. Maybe you were in similar position too when you were knew and had to learn this all.

When my contract is up for negotiation I will ask for more because:

A) I am away 3 days a week
It is coming out of my expenses so from the rate there is less money in my pocket

My approach will be to ask:

A) If I can work from home 2 days a week and leave early on the day I drive back from the location (will make up the extra 2-3 hrs when I stay there for 2 days)
C) Up my rate so it meets my expenses
D) Or ask them to make my contract from home and they can pay for my hotel, subsistence, travel expenses.

And if they don't agree I will leave.

The reason the work is lucrative is BECAUSE you are expected to have additional expenses. I suspect if you try any of the above they will thank you for your time and your services will no longer be required.

I just finished a contract which had considerable expenses. Once I'd dealt with them it meant that I was only just over the rate I'd have got for similar permanent work closer to home (but there isn't similar permanent work closer to home). I see that as the trade off, and while the headline rate can look fantastic, the reality isn't necessarily so.

jobbingmusician

Agreed. Don't cut off your nose to spite your face - £400 pd is a great rate for a first contract. And in subsequent contracts you can quote this rate without mentioning that it wasn't plus expenses, and move up the ladder.

I have every confidence that you should be able to get your daily expenses down well below £50 in total, for bed and the day's food. Nowadays £50 isn't an unusual amount to spend on commuting!