Q. I am looking at starting a new contract & it is the first one I have engaged on which looks to be clearly within IR35. If I take it on I will pay myself salary + pension contribution up to the 95% deemed payment restriction, & understand I cannot get corporation tax relief on my travel costs (or subsistence?).
My question is, please could you confirm the company can still pay the travel costs, but simply not get CT relief? If it does, are the travel costs treated as a benefit in kind & are they subject to NI please?
A. If the company pays for the employees’ travel expenses which do not qualify as business travel, then this will be treated as salary in the hands of the employee to which PAYE tax & NIC must be applied.
Your options as I see it are
1. Decline the work
2. Ask the client to reimburse your costs via expense claims
3. Ask for a larger rate to compensate for being unable to claim back costs.
4. Say the costs no longer make the work economic and negotiate a reduction in hours on site, offering instead to work remotely from home. Stress that this helps the employer to also meet their green targets and environmental objectives.
If enough contractors do the above rather than accept a pay cut then the public sector will need to respond. For someone based in Edinburgh for instance the costs of travel and subsistence to London are around £500-£600 a week. This needs to come from somewhere if we are still insisting in the digital age that work can only be done face to face.