Travel and Subsistence: The 24-month Rule
Posted on 9th July 2016 at 12:00
Contractors in the UK are allowed to claim back travel expenses, so long as these are incurred while travelling to and from a ‘temporary workplace’. A workplace is deemed temporary so long as the contractor is not travelling to the same site for a period of 24 months or longer. Beyond this point, contractors cannot claim back travel expenses. This period is known as the 24 Month Rule and is something all contractors should be aware of.
When does the 24 Month period begin and end?
The 24 month period begins on the first day you travel to the client site, and ends 24 months later, regardless of any breaks in work during that time. The 24 month period cannot be paused, nor can it be reset; bar one or two exceptions, outlined in the next section.
Claiming back travel expenses is allowable so long as the period does not exceed 24 months. If at any point during this time, it becomes apparent that the contract will exceed the 24 month period, you will no longer be allowed to claim expenses from that point onwards.
For example, say you have an 18 month contract, beginning in January 2016 and finishing in June 2017. At the 12 month mark, December 2016, you are informed that the contract will be, or is likely to be, extended for an additional 12 months, taking the total contract time to 30 months. In this scenario, you would be unable to claim travel expenses from December 2016, even though you are only half-way through the 24 month period. From the date you are aware that the contract will run, or is likely to run, beyond 24 months, you cannot continue to claim back any travel expenses.
Are there any exceptions?
If you continue to work in the same capacity, for the same client, but the client location changes significantly, you may be able to reset the 24 month period, and begin claiming travel expenses again.
The ‘significance’ of the change of location is somewhat subjective. If the client moves to a different city, adding addition time (say 20 minutes) and cost to the journey, you could argue that the change is significant enough to warrant a new 24 month period. However, if the client moves from one end of Oxford Street to the other, it is unlikely to be considered significant enough and the 24 month period from your original start date will continue.
There may also be an opportunity to restart your 24 month period if you can show that you spent less than 40% of your time at the same workplace over the previous 24 months of your new start date.
If you want to know more about what expenses you can claim back, outside of the 24 Month Rule, take a look at our Expenses Guide. If you’re concerned about how the 24 Month Rule will affect you, or need any additional information, please don’t hesitate to get in touch.
Nicola J O'Sullivan -
Founder | Xero Champion | IR35 Expert
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