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What Is The 24 Month Rule

Fri 13th Oct 2017
Are you a contractor claiming for travel expenses? Are you aware of the 24 month rule?
Often this subject comes with a little confusion so we take a quick look at what this means:
The 24 month rule has been in place since 1998 and allows travel expenses to be claimed from your home to your client’s site as long as it is classed as a “temporary workplace” and complies with the following criteria given by the HMRC:
• whether the employee is attending the workplace for a limited duration or a “temporary purpose”
• whether they perform, or expect to perform their duties to a significant extent at the workplace (interpreted to mean spending over 40% of their working time there – also known as the “40% rule”)
• whether they attend, or expect to attend, the workplace for more than 24 months
Travel expenses are claimable if the above is complied with.
When does the 24 month rule start?
The 24 month rule starts from when a contractor first starts travelling to a client’s site and continues through the contract term as long as this does not exceed a 24 month period. It is assumed that when travel expenses are claimed, there is a view to the contract not lasting more than 24 months. However, it is worth noting that if a contract is extended during its time and looks to last longer than the 24 month time-frame, the expenses must cease at that point and are no longer claimable.
Can a break be used to start the 24 month period again?
If there is a break when working with a client and the contractor continues working with the client again in the near future, this is counted within the 24 month period. Starting a new 24 month period is not accepted by the HMRC unless the contractor has left a location long enough so that when they return, the period they were there before is not more than 40% of the time over the last two years.
With this mind, if the contractor has spent 40% or more of their time at the client’s site within this time frame then expenses cannot be claimed either.
What if the location of the client changes?
Each circumstance is different however if your travel expenses are not affected much by the change to location, then a new client site will not be considered. If the circumstances change significantly and there is a much greater expense to the travel to a client’s site, this is classed as a new client site and a new 24 month period can begin.
Record keeping and receipts are essential to ensure that if a contractor is looked into by the HMRC, they can prove that travel has taken place.
A contractor can claim for:
• The costs of public transport such as train, underground, tram, coach, bus and ferry journeys
• Mileage for car journeys, road tolls and parking
• Taxi fares
• Air fares.
If you have any questions regarding the 24 month rule then we would be happy to help – GET IN TOUCH with us for a confidential chat!
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