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Post Info TOPIC: Working from home , subsistence


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Working from home , subsistence


Hi 

After reading through few of the related the articles I've decided to kindly ask for the opinions. 

The customer no 1 is a SE baker working from home. Some refurbishment has been performed at two rooms at their house , living room has been converted  to a kitchen / production floor. 

Would it be correct to move from  housing expenses deducted at a flat rate at £6 a week, to a certain percentage from a total costs of housing - council tax, water , energy, e.t.c. ? The house is owned , but if rented, could the rent expense be used as well?

 

The customer no 2 is SE an Uber taxi / Uber eats delivery driver. Is self- employed of this type better off to use flat rate to deduct costs for a space where he/she can produce reports , send emails, do some marketing e.t.c for their business? Or, expense calculated on percentage of total property running costs still can be implemented in this case? 

Apart from that, I have read various opinions regarding subsistence for (HGV) drivers. But what about taxi / uber drivers, if they work up to 8 hours away from home ? Can a subsistence be used in this case as a deductible expense please? 

 

Many thanks for your views. 



-- Edited by Roadrunner on Monday 12th of July 2021 05:18:53 PM

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Kirill



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Hi Kirill

Yes you can move from the flat rate (see below) to claiming actual costs, this is usually done by counting how many rooms in the property then dividing the costs between these and then the percentage that the room is used for business, they used to have some guidance on how to apportion the costs on the HMRC site not sure if they still do, yes you can also allow the rental expense.

The flat rate of £6 is for employees, it depends on how many hours you work from home, you need to work 25 hours a month or more to claim simplified expenses again guidance is on the HMRC site, just had a quick look and between 25/50 hours is £10 per month 51/100 hours is £18 per month (not sure if this is up to date), think it would be hard to justify a Driver spending too much time working from home.

As you say there are varied opinions on this, and I think the main thing to consider is, is the work considered to be 'normal pattern of travel' I would argue that it is not and differs every day and this makes them an itinerant worker and I believe that the legislation also agrees with this, but each situation is different.  

 



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Doug

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Agree with Doug bar the Uber driver (well sort of) and I'm throwing this out for debate.

A taxi driver/delivery driver will normally work within a local area, save for the odd trip out of town, so I question if that classes as itinerant.

However, I had this debate with a lass on accounting web, called Portia, who was very knowledgeable on tax and she disagreed with me.

https://www.accountingweb.co.uk/any-answers/is-subsistence-expenses-allowable-for-a-mini-cab-driver-as-a-sole-trader

 

Thoughts anyone?

 



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John 

 

 

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Thank you John , thank you Doug for your views.
Therefore, the question for me is if I would suggest to that customer to accept a certain degree of risk in the case if hmrc inspector may consider his trade as (non) itinerant .
John I have read the tread at accountingweb as well, but still there are some queries for me in this.

The nature of food delivery service is that every single trip the driver is taking tends to be unique , though there are addressees from where orders come more than once for sure. That matches an itinerant trip meaning. I have asked the customer to present his job lists, these do not give physical addresses where the driver had been, however it is possible to discover that the trips vary every day. But yes, these are mostly within the town area. Do not know what else could help to resolve that question correctly. In this case, leaving aside the initial subsistence expense may cost for the customer roughly £230 in Income Tax and some pennies in Class 4 .

Thanks.



-- Edited by Roadrunner on Wednesday 21st of July 2021 12:55:29 PM

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Kirill



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Hi Kirill

I usually think of itinerant as regular journeys outside the area with no set location.  

That said, giving the option for your client to claim, with the proviso that the claim may be rejected if challenged, is one I wouldn't disagree with.

 

 



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John 

 

 

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Another view point for people working locally to home is;

Could have popped home for lunch, but chose to go to Greggs instead - not a subsistence claim

Not realistic to pop home for lunch and had to go to Greggs - subsistence claim

Of course 'could have/not realistic' is somewhat open to individual interpretation.

 

Regarding the self employed baker, I would definitely be swapping to actual costs instead of simplified expenses!



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Jenny

 

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BudgetB wrote:

 

Another view point for people working locally to home is;

Could have popped home for lunch, but chose to go to Greggs instead - not a subsistence claim

Not realistic to pop home for lunch and had to go to Greggs - subsistence claim

Of course 'could have/not realistic' is somewhat open to individual interpretation.

 

Regarding the self employed baker, I would definitely be swapping to actual costs instead of simplified expenses!


Doing one's accounts from home is one thing but running a manufacturing business (they're building cakes, it's making stuff, manufacturing, lol) will change the house from a home to business premises and as such attract business rates, insurances, etc.

Is this a case where its not so much a case of advising the client as to whether they could but rather whether they should.

 

Seperately, I am of a mind that meals should not be claimable as an expense unless like long distance lorry drivers a special dispensation is created.

The arguement that the taxi driver could in most instances have gone home is sound.

There is no arguement to suggest that the eating of the sandwiches was a neccessary part of the work (We eat to live, we do not eat to work. The meal would have needed to be consumed regardless of the work).

I am reminded of HMRC's position here with contract workers in the city who on the two year rule could claim some expenses. The clock reset when they changed contracts. However, HMRC's arguement (upheld) was that within a given area the worker is not changing jobs as they always expect to work within that area (such as going bank to  bank within the square mile) so the clock doen't reset. Of course, that is mixing up incorporated entity regulations with the self employed but just using that as an indication of the arguement that HMRC would deploy in such a case.

Personally I would not allow expenditure on food or drink.

 

Shaun.

 



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Shaun

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Hi Shaun,

Yes, in relation to the taxi drivers, a local driver working in his town has no need for a meal claim, but a taxi driver doing airport runs (assuming he doesn't live next to an airport of course) for example, is not really much different to a  lorry driver and so I would see no issue with claiming for a lunch/snack.  Appreciate the point that food is consumed whether you work or not, but personally I would let it go through.  We'll have to agree to disagree biggrin

With the bakery use of home, I had (maybe foolishly) assumed that Kirill was aware of the potential pitfalls of using ones home as a business, but yes to declare 100% use of part of your home as a business opens up all sorts of potential problems. On a basic level of the question as asked the actual expenses will give a better claim than the simplified expenses in that particular case.  I should probably have written a longer answer originally than my one sentence response! 

 



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Jenny

 

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Hi Jenny,

I don't think that we are actually disagreeing in that the airport (similar assumptions) is not a normal place of work and if not within an area that could be considered a normal place of work then expenses out of the ordinary may be expected. Going back to the square mile analogy travel to from that area would be normal but travelling to a clients premises in (say) Glasgow would not be.

With the lorry driver scenario I think that is very good negotiations by the T&GWU in that the lorry driver spends no more on the food they consume because they are on a journey so why in any other industry would the tax payer subsidise their eating? But, of course, ours is neither to set the rules nor enforce them. It is only to advise on what they are and accurately / consistently report based on adherence to them. So, lorry drivers get tax relief on meals even though it seems to run rough shod over underlying tax principles applied to everyone else... Funny old world innit.

All the best,

Shaun.







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Shaun

Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.

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