Allowance towards travel expenses - taxable?

MrChips

Hi.  My wife is not employed but has been asked to travel to Dubai next month to participate in a conference as a speaker/moderator due to her expertise in a certain area.  The firm organising the event have said they will pay for her flight and give her £1,000 towards accommodation/subsistence while she is there (around 3-4 nights).

We were just wondering if this £1,000 would be counted as income, and therefore taxable?  She doesn't expect to make any profit out of the trip as hotels are generally around £200 a night plus there will be taxis and food expenses in addition.

If it makes any difference, she doesn't expect to earn more than the tax free allowance next year but we can't be sure as she may get a job and/or she may opt to become self employed and work on a few of her own projects.

Thanks!

Bookworm105

So she is operating as self employed.
Is she already required to do a tax return? 
Does she have a PAYE employment as well?

She has received £1,000 income against which she can offset her actual expenses.

There are no circumstances where round sum up front amounts are not classed as personal income. The issue is whether there is a net profit remaining when actual expenses are deducted against them.
If there is, then then that is taxable profit. 

OR

if she has no other self employed income at all then she can offset the full 1.000 income against the £1,000 trading allowance she is entitled to claim. In that case, there is no net taxable profit, even if she spends less than the 1,000 she was paid. Full details here:
Tax-free allowances on property and trading income - GOV.UK

Grumpy_chap

MrChips said:

Hi.  My wife is not employed but has been asked to travel to Dubai next month to participate in a conference as a speaker/moderator due to her expertise in a certain area.  The firm organising the event have said they will pay for her flight and give her £1,000 towards accommodation/subsistence while she is there (around 3-4 nights).

We were just wondering if this £1,000 would be counted as income, and therefore taxable?  She doesn't expect to make any profit out of the trip as hotels are generally around £200 a night plus there will be taxis and food expenses in addition.

If it makes any difference, she doesn't expect to earn more than the tax free allowance next year but we can't be sure as she may get a job and/or she may opt to become self employed and work on a few of her own projects.

Thanks!

Why is your wife travelling to Dubai as an expert speaker and not being paid a professional rate?
It is absolutely certain that the firm organising the event are making money from it, as will all their staff.
In fact, given this is Dubai, there is every possibility that your wife will end up nett out of pocket after meeting her hotel and subsistence costs out of the £1k allowance.
I assume that, as you reference the "firm" organising the event, this is not a charitable event / altruistic act on her part.
Have the firm organising the event sold this to her on the basis of raising her profile as a "key note" speaker?
She really needs to understand whether this is simply an opportunistic firm taking advantage of her good nature and, if that is the case, either simply don't go, or submit a proposal to attend on full professional rates.

FlorayG

Quite apart from the tax situation this 'firm' is taking advantage. If your wife is giving her expertise for free then they should simply pick up ALL the costs from the minute she leaves your house to the minute she walks back in through your door; not give her an amount towards expenses. They should be paying for a decent hotel ( I can't imagine how much that would cost in Dubai), all her meals, taxi, incidental expenses etc. Also this would then negate the tax problem, because your wife won't have earned anything 

flaneurs_lobster

FlorayG said:

Quite apart from the tax situation this 'firm' is taking advantage. If your wife is giving her expertise for free then they should simply pick up ALL the costs from the minute she leaves your house to the minute she walks back in through your door; not give her an amount towards expenses. They should be paying for a decent hotel ( I can't imagine how much that would cost in Dubai), all her meals, taxi, incidental expenses etc. Also this would then negate the tax problem, because your wife won't have earned anything 

Absolutely this, and @Grumpy_chap 's points above are very valid. This is a commercial proposition, and yes, you should be aware of the taxable income because your wife should be paid a professional fee for her contribution.

The "firm" (care to name them?) are trying it on. 

MrChips

Hi all - many thanks for all the detailed responses.  In respect of the points raised:

1) She has been invited to moderate a couple of sessions at the event, so more of a 'chairing/facilitating' role for the sessions on her industry than as a key note speaker herself.  I agree it would be nice if they paid her, but the organisers are unlikely to do this (she also used to work in the events industry so understands how this works) so for her it's simply a choice between saying yes or no (she's already negotiated the £1,000 up from £800!).  She's keen to do the event as it will help raise her profile, build her credibility and make new contacts, so as long as she doesn't make a loss (or at least only a trivial one) she's minded to accept (subject to checking the £1,000 won't actually have tax taken out of it as well!).  As she's not currently working, there's not much opportunity cost / loss of earnings to factor in.

2) She's technically self employed at the moment but hasn't had any income for a while.  So no tax returns, no PAYE.  The £1,000 trading allowance is interesting and worth knowing about - thank you for raising that.

Just so I understand (and in case similar opportunities comes up again later in the tax year), would any excess of allowance over the expenses incurred only be taxable to the extent it exceeds (in combination with any other income such as savings interest) the personal allowance (in which case we don't need to worry until her overall income starts getting close to £12k)?  Or does this fall outside the personal allowance?

Bookworm105

MrChips said:

Just so I understand (and in case similar opportunities comes up again later in the tax year), would any excess of allowance over the expenses incurred only be taxable to the extent it exceeds (in combination with any other income such as savings interest) the personal allowance (in which case we don't need to worry until her overall income starts getting close to £12k)?  Or does this fall outside the personal allowance?

it is her taxable profit that counts towards her personal allowance, not just the fact she received an "allowance". You are however correct that the personal allowance counts against any and all sources of profit/income

the point about self employment is she can choose how to calculate her taxable profit by either using actual cost to give actual profit (or loss) or she can instead use the trading allowance (leaving her on either a profit or zero, but not a loss)

MrChips

Thank you, I think I follow the process now.

I really appreciate all the input from everyone on this.

Bookworm105

MrChips said:

2) She's technically self employed at the moment but hasn't had any income for a while.  So no tax returns, no PAYE.  

after thought... has she reviewed her state pension position?
Will she attain sufficient years to get a full pension? (Assuming of course you are not so wealthy that her getting a pension in her own right is irrelevant )

as she has not crossed the threshold requiring a tax return, has she ever registered as self employed?
If she has, there is nothing stopping her submitting a voluntary tax return in order to be able to voluntarily pay Class 2 NI and therefore secure a year's worth of state pension credits. Paying Class 2 (self employed) is a lot cheaper than paying the Class 3 Voluntary NI so if she has some SE income and can thus genuinely show she was SE that tax year, it can be rather MSE method of buying state pension credit (if she needs pension of course)

sadly HMRC "admin" respondents once more show they never quite provide comprehensive answers
Am I still classified as self-employed if earnings for the financial year were less than £1000 - Community Forum - GOV.UK