Question, I am an IT contractor trading through my own limited company and I have a 6 month contract that will require a lot of travel and staying over in France. With regards to claiming my subsistence and accommodation costs whilst in France I believe there are simplified benchmark scale rates I can claim – can you explain how these work?

 

Overseas Expenses Scale Rates

 

Answer, September 2017

There are indeed simplified overseas expenses rates for limited company directors & employees.

You can use these when working abroad as an alternative to keeping all your receipts and reimbursing yourself for the actual amounts you spend.

HMRC call them “overseas benchmark rates” and publish tables for all countries, including France, which can be found on the link below.

HMRC Overseas Benchmark Rates

To be able to use these rates, you must be working outside of IR35.

Also, the place you’re working in, i.e. France, must qualify as a “temporary workplace”.

As long as you haven’t worked in France during the last 24 months and your contract doesn’t extend beyond 24 months, then the location in France where you’re working will qualify as a “temporary workplace”.

Six months won’t be a problem, but just be aware of the rule in case the contract gets renewed or extended a few times.

We discuss the complicated area of travel rules and temporary vs permanent workplaces in our tax planning eBook.

These HMRC scale rates are usually updated annually, in October or November, so you’ll need to keep an eye on HMRC’s website at that time of year.

The major cities in France are listed separately in the tables, and each have their own set of benchmark rates. If you’re not staying in one of these cities, you have to use the “Elsewhere” rate.

HMRC doesn’t allow you to simply use the rates for a city that you think is comparable.

The major cities listed for France are: Bordeaux, Lille, Lyon, Marseilles, Paris and Strasbourg and the rates vary considerably.

For Paris, the “room rate” is 199.5 Euros per night, whereas for Strasbourg it’s only 108 Euros.

As you see from above, the rates for France are quoted in Euros.

For each location, there are hourly rates (over 5 hours, over 10 hours and 24 hours), a room rate, rates for individual expenses (breakfast, lunch, dinner, drinks, other and hotel to office travel) and a total residual rate (which is the sum of all the other rates, excluding the room rate).

This can seem a little complicated, but if you’re staying in the same place for more than a day, the simplest method is to claim the “room rate” + the “total residual” rate, which covers all your meals as well as an allowance for getting between your accommodation and the place where you’re working during the day.

Each “day” is treated as the 24-hour period starting from when you arrive in France. You would then use the appropriate hour rate (over 5 hours or over 10 hours) to cover the part day when you leave France.

Whilst using the benchmark rates will save you keeping receipts, it would be advisable to check beforehand that the cost of your accommodation is going to be covered by the room rate. If it isn’t, you do have the option of reimbursing yourself for the actual cost of your accommodation instead, and then claiming either the over 5-hour (if your accommodation includes breakfast) or the over 10-hour rate to cover your other meals and hotel to office travel.

You mention that a lot of travelling will be involved and it sounds like you will be doing a bit of travelling to and from France, rather than remaining there for the full 6 months. Remember that you can claim back the costs of travelling from your main place of business in the UK to your client location in France in the usual way. Refreshments taken on the UK side will need to be recovered based on actual expenses, but you can use the benchmark rates once you’re in France.

There are two situations to be wary of. The first is where you’re provided with accommodation that you don’t actually pay for. This might be because you’re staying with a member of your client’s staff, or perhaps you have friends or relatives in France who’ve offered to put you up. In these circumstances, you can only claim 10% of the appropriate “total residual rate”, this being to cover a gift for your host, for example.

The second situation is where you’re staying in a “vacant residential property” or a serviced flat with cooking and/or laundry facilities and this accommodation has been paid for by your client. In this circumstance, you can only claim 80% of the appropriate “total residual rate” for the first 7 days, and only 50% of it per day thereafter.

Finally, don’t forget those “incidental overnight expenses” – dry cleaning, newspapers, wi-fi charges etc. As long as they don’t exceed £10 per day (averaged over the period of your stay) you can reimburse yourself for these in addition to the benchmark rates.