Paying Per diems

[Dave22]

Hi All

 

Ok, as far as I was aware Pd's (per diems) have alsways been a tax free allowance for feeding yourself or for hotels.

 

So I am employed fulltime and have recieved Pds tax free before.

 

I have had a heated debate with the accounts dept, as I have been told that they willl now be Taxing Pds at the usual rate as if it was extra earnings. This is what they were told by the accountant, when they went to visit on monday. We are a small company with 9 people employed.

 

So a little disgruntled at this revalation, I have turned to the Blueroom for some answers to hopefully clear it up.

 

 

I do not want to rock the boat to much, but I just want to make sure I get what I am rightfully entitled to, especialy in this current climate.

 

 

I am no accountant, but I do think my accounts dept have been mis informed or got the wrong end of the stick.

 

Any answers or help how to approach them with the right arrgument would be greatly appreciated.

 

Dave

[JDP]

No officially, PD's should be taxed for.

 

However the fact they are cash and most likely to spent straight away and loose the majority of tax you are likely to be paid on them anyway means most freelancers don't claim them - however you technically should...

[Just Some Bloke]

... though obviously if they are used for food and board then you can keep the receipts and claim it all back against tax at the end of the year.

[zonino]

claim actuality then

[itinerant baker]

... though obviously if they are used for food and board then you can keep the receipts and claim it all back against tax at the end of the year.

 

 

.....Though not if you're employed and paying PAYE.

 

 

 

It's an argument I have with my accountant every time I take him my books, well not any more as I make sure they go nowhere near him. But as the tax/law stands you should be paying tax on them.

 

 

 

The days of an evenings worth of beer vouchers in a brown envelope seem to be long gone, I've only ever received actual cash PD's once.

 

 

:edited to make sense as someone had sneakily posted before me:

[Stan Hope-Streeter]

For some years now, all the companies and acts I work for (I am a freelance audio engineer) have required PD's to be included in my invoiced figures. They are taxable but, provided a job involves an overnight stay, meals can be claimed as expenses in your accounts.

[Bobbsy]

Inland Revenue (now HMRC) seem to be pretty inconsistent on this. The company I was working for 15 years or so ago was zapped by them and told that any per diems would have to be taxed. The only way around this seemed to be to submit receipts and claim actuality...which is what we did with all the extra paper work this entailed. Appeals to the tax man that other companies were still allowed to go the per diem route fell on deaf ears.

 

Bob

[zonino]

Inland Revenue (now HMRC) seem to be pretty inconsistent on this. The company I was working for 15 years or so ago was zapped by them and told that any per diems would have to be taxed. The only way around this seemed to be to submit receipts and claim actuality...which is what we did with all the extra paper work this entailed. Appeals to the tax man that other companies were still allowed to go the per diem route fell on deaf ears.

 

Bob

 

bear in mind that overseas per diems have different implications

[MarkPAman]

As he's probably in bed - IIRC Bobbsy was in the UK 15 years ago

[Bobbsy]

I should be in bed...but I can confirm I was in the UK until summer 2007. The incident I mention was at a UK-based TV company.

 

Bob

[bjkered]

Remember PD's mean that you can make money when you do not spend all the money on Food and drink hence the tax bill. ie you have earned money above the expense of actual food and accommodation.

 

Hence the move to actuals is the easiest way to do

[zonino]

As he's probably in bed - IIRC Bobbsy was in the UK 15 years ago

 

indeed, doesn't change the fact that per diems paid for travel abroad are treated differently for tax purposes from per diems for the UK!

[Rob]

The days of an evenings worth of beer vouchers in a brown envelope seem to be long gone, I've only ever received actual cash PD's once.

 

Rock & roll PD's paid by production usually still take this form. So I've heard :P

[Leggy]

The days of an evenings worth of beer vouchers in a brown envelope seem to be long gone, I've only ever received actual cash PD's once.

 

Rock & roll PD's paid by production usually still take this form. So I've heard :P

 

QFT.

 

Leggy.

[Peter F]

Ok, as far as I was aware Pd's (per diems) have alsways been a tax free allowance for feeding yourself or for hotels.

 

So I am employed fulltime and have recieved Pds tax free before.

 

I am not an accountant, I am not qualified to give tax advice, the following is my interpretation only.

 

As an employee there is an option for your employer to make scale rate payments to you tax free when you are working away from home (not at your normal place of work)

 

To make this sort of payment requires your employer and the tax inspector to be in agreement about how much constitutes a reasonable rate to cover your hotel, food and other expenses incurred as a result of being away from home.

 

Paragraph 9.6 explains this:

http://www.hmrc.gov.uk/helpsheets/490-chapter9.pdf

 

http://www.hmrc.gov.uk/manuals/senew/SE10061.htm

 

Per diems or set subsistence payments are not intended to be a method to supplement your income. If they are seen as such then they are taxable income.

 

There is most likely a good argument for you to be claiming actualities, i.e. if you go to Pizza Express and spend £20 then you give your employer the Pizza Express receipt for £20 and they give you a cheque for £20. This will avoid you being deducted tax and National Insurance contributions on the cost of your tea.

 

If your p.d's were a really good little earner in the past then there's every chance you were being paid too much and the Inland Revenue would be perfectly entitled to its share. If your p.d's weren't really enough to buy a reasonable breakfast, lunch and dinner every day you were away from home in addition to covering taxi expenses to and from the railway station, venue and hotel then actualities will be better for you.

 

Cheers,

 

Peter