5% expense allowance or 150%??

Contractors who, under IR 35, are trying to run their businesses with a 5% expense allowance will be interested in the latest news concerning the expense allowance for MPs

In an article on Sky news it is reported that

MPs want an extra £20,000 to bump up their House of Commons allowances – despite already getting £50,000 a year for expenses.

The cash is paid out on top of the annual salary given to MPs of £47,000.

The report goes on to state

A clear majority of Labour MPs have endorsed the plan but they deny they are out to milk the system for as much as they can.

These tax free allowances are in sharp contrast to that proposed by the Revenue for Contractors caught under IR 35.

A Contractor who provides services for £25 per hour will have an allowance of some £2350 with which to run his office, find work and pay staff salaries when his business has no income, pay accountancy and legal fees, purchase advice on contracts, keep up to date with the latest technology, etc.

This compares with an MP who will (under these proposed rules) have an allowance of some £70,000. For most Contractors, who have received cut and paste letters from their MP, containing standard responses, they must wonder what extra office expenses are incurred that could possibly justify such an amount when compared with the derisory amount provided under IR 35