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Is my accommodation a tax-deductible business expense?

Question

I am an IT contractor whose contracts usually require me to work 3+ hours journey from my rural home/home office. In these cases my company will rent accommodation near the client site which I use Mon-Thurs only. I claim expenses from my company for weekly travel from home to/from the company accommodation. Post-April 2020, If I were to accept a contract that the client had determined to be inside IR35, would my company still be able to rent accommodation and treat the outlay as a tax-deductible business expense? Would I personally still be able to claim for travel from my home to the accommodation?

Answer

As a Limited Company contractor HMRC will allow you to rent accommodation near the client’s site and claim this cost back as a legitimate business expense. Please note however that the rented accommodation must not be considered your main place of residence, if this is the case then unfortunately this will be disallowable and no tax relief will be available. With effect from 6 April 2020 if you are engaging in a contract deemed to be inside IR35, you will be unable to claim expenses which includes things like accommodation as your status will be considered to be that of an employee. If your end client was to send you on a temporary assignment elsewhere however and you were to incur costs for accommodation as a result of this, then you would be able to reclaim this amount back through an expense claim to your end client, similar to a typical employee. The same rules apply here post April 2020 concerning travel and subsistence expenses.

This answer was provided by QAccounting.

By Contractor Doctor

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