Contractors working through their own limited company can legitimately claim subsistence as business expenses to help reduce their corporation tax liabilities.
However subsistence can only be claimed if their contract is deemed to be temporary.
- A contract is deemed temporary if it lasts or is expected to last less than 24 months and at least 40% of the contractors working time is spent at the site. If this is not the case the contract is not deemed to be temporary; subsistence and travel cannot then be claimed.
If a contract is temporary and the contractor spends more than 5 hours away from the trading address (normally the home address for contractors) then subsistence can be claimed.
Note – subsistence can only be claimed for actual expenditure incurred and the expenditure must be “reasonable”. Round sum expenses or set amounts per shift cannot be claimed by the contractor (receipts must be kept for all business expenses).
Types of Expense:
There are specific rules that apply to what is deemed business travel and broadly they are as follows:
- Travelling from home to a regular place of work is not classified as a business journey.
- Travel between two places of work is allowable (their home is the trading address for many contractors).
- Between home and a temporary workplace is allowable.
Meals & Accommodation
If staying away from home reasonable costs for accommodation, lunch and an evening meal can be claimed. You can also claim £5 a night for incidental expenses which you do not need to keep receipts for.
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