• Visitors can check out the Forum FAQ by clicking this link. You have to register before you can post: click the REGISTER link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. View our Forum Privacy Policy.
  • Want to receive the latest contracting news and advice straight to your inbox? Sign up to the ContractorUK newsletter here. Every sign up will also be entered into a draw to WIN £100 Amazon vouchers!

Clarification on "2 year rule"

Collapse
X
  •  
  • Filter
  • Time
  • Show
Clear All
new posts

    Clarification on "2 year rule"

    Hi folks,

    Can anyone offer a definitive answer on what happens if you stay in a contract for more than 2 years? I've spoken to a number of people so far and they all give different answers, such as:

    1) You can no longer claim expenses nor claim dividends (i.e. everything has to be PAYE)

    2) You can't claim expenses, but everything else stays the same

    3) There's no difference after 2 years!

    I'm confused! My understanding was that if you know your contract is going to extend over 2 years (which is not the case yet with myself), you're unable to claim expenses, but I've no idea what other, if any, issues there are.

    Any help gratefully received.

    Thanks,

    Mark

    #2
    The answer is 2 Bob....from the point you know you are going to be there over 2 years.

    Comment


      #3
      Once you know you are going to be working in the same location for more than two years you cannot claim travel expenses.

      So if you get a three year contract to work at the same location you can't claim travel expenses because you knew from the outset that you would be working there more than two years.


      If you work there for eighteen months and get an extension that will put you over two years, you cannot claim travel expenses from that point onwards, but it was fine to claim travel expenses for the first eigtheen months when you didn't know that you would be working at the same location for two years or more.

      A contract does not automatically become IR35 caught after two years, you can still take your income as a token salary and divis if you wish (assuming you have an IR35 complient contract).

      Comment


        #4
        IANAA

        It's related to travel expenses. You cannot claim for travel expenses to and from a place of work where you have been or are expected to be working at for 24 months or more because the workplace is no longer 'temporary'.

        Dividends and other expenses (e.g. accountant fees, insurances etc) are not affected.

        http://www.hmrc.gov.uk/manuals/nimmanual/nim06270.htm
        It's about time I changed this sig...

        Comment


          #5
          Yes 2 is the answer however... this kicks in as soon as you know your contract will go beyond 2 years so if you've been there 18 months and you get a 12 month extension you should stop claiming expenses.
          Science isn't about why, it's about why not. You ask: why is so much of our science dangerous? I say: why not marry safe science if you love it so much. In fact, why not invent a special safety door that won't hit you in the butt on the way out, because you are fired. - Cave Johnson

          Comment


            #6
            Is it just travel expenses that can't be claimed ?

            Can books/equipment etc still be claimed ?

            Comment


              #7
              Thanks for all the answers - and so quickly!

              At least I'm getting some consistent answers now

              Cheers,

              Mark

              Comment


                #8
                Originally posted by FiveTimes View Post
                Is it just travel expenses that can't be claimed ?

                Can books/equipment etc still be claimed ?
                Just the travel to/from your LtdCo office (i.e. home) to the client's place of work.
                Drivelling in TPD is not a mental health issue. We're just community blogging, that's all.

                Xenophon said: "CUK Geek of the Week". A gingerjedi certified "Elitist Tw@t". Posting rated @ 5 lard points

                Comment


                  #9
                  Originally posted by FiveTimes View Post
                  Is it just travel expenses that can't be claimed ?

                  Can books/equipment etc still be claimed ?
                  Just travel expenses that can't be claimed (and associated meal allowances because of travel if they apply)

                  Comment


                    #10
                    To clarify the general answer of 2. This is correct if you are site based. It is also the normal case.

                    However there are circumstances in which the expenses are still claimable. Basically you don't spend more than 40% of your time at the site. So get that 10 year gig, work from home, pop into the office once or twice a week and the exes are still claimable.

                    Comment

                    Working...
                    X