Freelance Expenses & Insurance

[Nick LX]

I know this has been covered a few times but I haven't found an answer for my particular question. Two questions:

 

1) My situation is that I live in two difference places. One is essentially next to where the companies I freelance for are based. The other is 100 miles away. The HMRC website says:

 

What counts as business mileage?

 

Business mileage is mileage you travel doing your job. It can include travel to a temporary work place but it doesn't include:

 

• normal travel between home (or anywhere that is not a workplace) and your permanent workplace
  
• private travel
  

 

Although slightly confusing, I gather from this that I cannot claim for travel expenses from either properties? If I were to set up a LTD company at my address that is 100 miles away could I claim for travel expenses then as it'd be my workplace?

 

2) Does anyone know any insurers for tools? I don't have an expensive tool kit by any means but it's about £600 of tools so obviously if the flight case goes missing then I'm in a bit of trouble.

[gareth]

If you're truly freelance (which doesn't, strictly, exist - you're self-employed), then you can claim for business mileage when travelling to and from your place of work. If your work at this company is frequent enough that HMRC start to consider it a permanent place of work, then your problems run much deeper than just business mileage claims because their argument would be that you're not self-employed, but rather an employee of this company and should therefore be PAYE.

[paulears]

The HMRC don't allow for travel between home and your normal place of work. If you are a freelance - as in, a self-employed person who works for a number of clients, then you don't have a normal place of work. If you have a limited client base, and are working at the same place very frequently, then you might not be self-employed, but an employee? I work for whoever telephones, and the longest I'd be at any single location would be maybe ten weeks? I understand that this could be considered a 'permanent place of work', but it wasn't raised as an issue when HMRC have me an inspection a few years ago. It was just a longer version of the usual contracts I work on. I have a van, and don't use it for private mileage - so it's 100% business.

 

It's crazy to consider the expense and added hassle setting up a Ltd company to avoid a few pounds worth of expenses - and let's be honest, setting up a company to get around travel expenses seems a tad over the top.

 

If you set up as a limited company - then you will become an employee, and will lose many of the advantages of self-employment, plus pay more NI, as the company and you will need to contribute.

 

The text you copied is from the employee section of their advice pages - and is mainly PAYE centred. As a self-employed person, then the costs of doing your business are a different thing. Perhaps your employment status is the problem area. If you have a number of clients, then getting to each job is not really an issue, is it?

[Nick LX]

The types of events I do are maximum of 3-4 days on location. Most of the events are in fact single events like dinners/parties. I "freelance" for 3 companies whose events are in various different locations.

[Tom]

If your call to work is on location, and the company expect you to arrive there under your own steam then this is a legitimate expense. If your start point varies each time, and HMRC query this... well I must say I don't know how they will take to that.

 

If your call to work is where the company is based and you live "just down the road", what travel expenses are you looking to claim? You can't invent expenses, they have to be actual. That would be fraud.

[Nick LX]

If your call to work is on location, and the company expect you to arrive there under your own steam then this is a legitimate expense. If your start point varies each time, and HMRC query this... well I must say I don't know how they will take to that.

 

If your call to work is where the company is based and you live "just down the road", what travel expenses are you looking to claim? You can't invent expenses, they have to be actual. That would be fraud.

 

It's a mixture of both. Which journeys (if any) can I claim expenses for:

 

1) My call to work is the company warehouse and I'm at my other address that is 100 miles away

2) My call to work is on location and I'm at my other address that is 100 miles away

 

I wouldn't try to claim expenses for a trip that is 1 mile or make something up.

[kerry davies]

Are you an MP? Or maybe a Bishop? They are the only two cases where more than one "home" is considered by HMRC. (AFIK)

 

You need to discuss this with HMRC and get them to rule on your specific case. If you get a call to work at HQ and then drive one of their vehicles you are almost certainly an employee. If they insure your vehicle for carrying their kit and/or staff you are almost certainly an employee. I presume you have registered as a sole trader and have a UTR?

 

You need to note that all HMRC is non-specific and their wording is deliberate. They don't say, one way or another, but say things like "you MAY be an employee." This is because no two cases are identical and the answers to all these tax queries can be reduced to two words; It Depends.

[Nick LX]

I'm a student. So half of the year I live at my parents, and the other half I live at uni. It's almost exactly a 50/50 split as well.

 

I'll give HMRC a ring and see what they say.

[GR1]

'Freelance' doesn't exist except in the pub. You are either an employee or a Self Employed sub contractor. I presume your clients collected UTR,NI and PLI information before issuing Purchase Orders for you to invoice against? Do make sure that all this is in place before contacting HMRC directly. I would possibly take advice from a tax accountant first.

[gareth]

Where do the HMRC think you live? i.e., where do they send your paperwork to? Because as far as they're concerned, that's your home address, regardless of where you think you live.

[Nick LX]

'Freelance' doesn't exist except in the pub. You are either an employee or a Self Employed sub contractor. I presume your clients collected UTR,NI and PLI information before issuing Purchase Orders for you to invoice against? Do make sure that all this is in place before contacting HMRC directly. I would possibly take advice from a tax accountant first.

 

They collect UTR and PLI info, but not NI. I don't see why the would given I pay NI as I'm self employed.

 

I'll try and get in touch with an accountant asap.

[Junior8]

It all depends whether you are really self-employed and that is not the same as what used in the good old days to be called casual labour. In the extract below, from their website, I have highlighted the HMRC advice for deciding if you qualify as employed in the case of the kinf of work you are querying.

 

You are probably self-employed if you:

• run your own business and take responsibility for its success or failure
• have several customers at the same time
• can decide how, when and where you do your work
• are free to hire other people to do the work for you or help you at your own expense
• provide the main items of equipment to do your work

You are probably employed if you:

 

• have to do the work yourself
• work for one person at a time, who is in charge of what you do and takes on the risks of the business
• can be told how, when and where you do your work
• have to work a set amount of hours
• are paid a regular amount according to the hours you work, and get paid for working overtime - even if you do casual or part-time work, you can still be employed

As you are a student unless the total earnings from any employment/self-employment exceed £10000 then HMRC aren't going to be interested in the tax implications as there will be none to pay. NI is a different matter.

 

In the case of the two examples you give however IMO it would be very unlikely that a claim to be a self-employed contactor working at their warehouse would be allowed - unless you were doing work totally different to the core actvities of the business. In the other case the answer is 'it depends'. This will be defined by what work you are doing at the venue. What Kerry says is completely right. But if you go to a venue to work for another person (ie the client is another contractor) and not on your own account, that person decides what you will do when and how, you are likely to be considered an employee and this will be your place of work I would think.

[David Lee]

I note on your location you say "up the road from White Light" Do you contract for them? IIRC they are very good with advice about self employment.

[stories]

Hi,

 

Interesting topic, and I hope I'm not hijacking adding my thoughts/questions on similar subject:

 

I'm curious if the average 'AV freelancer' is truly self-employed in the eyes of HMRC, has it ever been tested by the revenue, that how we work and provide our services are indeed self-employed (I would think even the busiest 'freelancer', or event company, is small fry in the eye's of the revenue, to chase) ?

 

 

I find lot's of company's tell you what they want to pay, what expenses they will cover (or won't), tell you where and when to be, and they provide 99% of the equipment/tools... Very rarely do I get asked to provide a quote when engaged, not to mention parking in town not usually available or considered required (despite a days parking often been at least a quarter of the average day rate) as the company sub-contracting you is 'local' (but a tradesman with his tools = sub-contractor... needs to park..??)

 

 

I'm reading this thread, with interest, while having just done a job for a new client (established, reasonably larger in this game) and had there "new supplier" info through, that goes as far as telling me how they want invoices to look and sound (at least one point, in my interpretation, going against a valid vat invoice), so has sparked my interest.

 

Seems very shaky ground when your been told how to invoice and how to phrase it. I would have though that in it's self would be viewed dimly by the revenue, been that if you have to tell your subcontractors to sound "legit" then you probably have an idea they maybe not and your trying to cover yourself.

 

 

Additionally, I usually bill on expenses, like travel (as I'm not going to the same place of work regularly and often haven't had a chance to consider the mileage or travel options and times of travel, when accepting and engagement) in addition to my "standard rate", rather than an all inclusive cost. Does the revenue consider this a problem to do (to be classed as Self-employed)?

 

Interested in hearing other peoples opinions as nothing I do (including the format of my invoices) has been flagged up as a problem by my accountant.

 

Thanks,

 

S

 

If your start point varies each time, and HMRC query this... well I must say I don't know how they will take to that.

 

But at the same time, in this game, you don't always get home in between different jobs (I certainly sleep in the back of the van on occasions, to keep my sanity buy getting some sleep, rather than driving and/or to save a few bean's, or stay in a hotel), or just go between one site and the next so I'm not always leaving from the same location.

 

As well as using various train stations depending on the time of travel (not every line runs out of town at 3am... so I use several different ).

 

So I would expect that so long as you can justify the reason e.g. it's the summer, your a student, so you are 'living' at your parents for several months it wouldn't be much if any of an issue (my experience, admittedly with the VAT department of HMRC, is do your research, know your position and make sure you argue your case and get it escalated, as there people on the ground don't necessarily know what they are talking about if it's not a "common" area, which we tend not to be).

 

I would also say, keep plenty of notes to explain things (I keep my accounts in Excel and make notes at the end of a line against invoices for things, like 'traveled straight to site from hotel X from previous job' so if I ever need to explain something I have notes). So long as you can explain and justify things the revenue are generally ok.

 

 

s

[David Lee]

Very good points and, yes it would be interesting to get the HMRC view of if we are truly self employed as I am very similar to you in that respect.

 

On a side note, something bugging me today was a job advert for "freelance" sound techs. The description has such phrases as "successful applicant will be answerable to the Head of Sound and the Managing Director " and requires the person to be " available for installations, emergency call outs and routine maintenance."

 

All that sounds like an advert for an employee not looking for contractors.

 

I think, sometimes, employers can either be quite naïve on the tax implications and employment.