The 24 Month Rule in a nutshell

[unixman]

That wouldn't be right surely - if accommodation is not allowable after 2 years then the associated travel wouldn't be either - subsistence is also affected by the 24 month rule for the same reason

My apologies for raising this old chestnut again. I am looking for clarity on one specific part of the 24 month rule. I understand the whole thing except this:

Once the 24 month rule kicks in, it covers travel, which can no longer be reclaimed against tax. But does it also cover accommodation (I rent a room locally) and subsistence expenses ? Can I continue to claim those against tax ?

The internet says yes and no. This thread (I have searched every page) yes and no. I thought accommodation could no longer be claimed (I stopped claiming) but my accountant has just stated unequivocally that accommodation can still be claimed against tax and only travel is excluded. LisaContractorUmbrella (on this thread) says the exact opposite. Gov.uk does not back Lisa up, but it doesn't make a clear statement.

Websites generally concentrate on travel and barely mention accommodation.

[ContrataxLtd]

My apologies for raising this old chestnut again. I am looking for clarity on one specific part of the 24 month rule. I understand the whole thing except this:

Once the 24 month rule kicks in, it covers travel, which can no longer be reclaimed against tax. But does it also cover accommodation (I rent a room locally) and subsistence expenses ? Can I continue to claim those against tax ?

The internet says yes and no. This thread (I have searched every page) yes and no. I thought accommodation could no longer be claimed (I stopped claiming) but my accountant has just stated unequivocally that accommodation can still be claimed against tax and only travel is excluded. LisaContractorUmbrella (on this thread) says the exact opposite. Gov.uk does not back Lisa up, but it doesn't make a clear statement.

Websites generally concentrate on travel and barely mention accommodation.

Hi Unixman

I'm with Lisa on this one, accommodation is part of the travel and therefore when travel is caught by the 24 month rule so is related subsistence and accommodation.

HMRC's manual 490 - Employee travel is the best document to refer to on this one and can be found at the following link:

https://www.gov.uk/government/upload...321897/490.pdf

It's a good 76 pages of reading but in particular you want to go to section 5.4 under subsistence which states:

The cost of business travel includes subsistence costs attributable to and
incurred during the journey in question. Similarly, where an employee has
to stay away overnight on business, the cost of accommodation is part of
the cost of the business travel. Even where an employee stays away for some
time, the cost of meals and accommodation is part of the overall cost of the
business travel.

On what basis was your accounting advising that the accommodation remains claimable?

I hope this helps, let me know if you are still unsure.

Martin
Contratax Ltd

[TheFaQQer]

My apologies for raising this old chestnut again. I am looking for clarity on one specific part of the 24 month rule. I understand the whole thing except this:

Once the 24 month rule kicks in, it covers travel, which can no longer be reclaimed against tax. But does it also cover accommodation (I rent a room locally) and subsistence expenses ? Can I continue to claim those against tax ?

The internet says yes and no. This thread (I have searched every page) yes and no. I thought accommodation could no longer be claimed (I stopped claiming) but my accountant has just stated unequivocally that accommodation can still be claimed against tax and only travel is excluded. LisaContractorUmbrella (on this thread) says the exact opposite. Gov.uk does not back Lisa up, but it doesn't make a clear statement.

Websites generally concentrate on travel and barely mention accommodation.

HMRC define travel as the actual travel, subsistence and accommodation:

Similarly, where an employee has to stay away overnight on business, the cost of accommodation is part of
the cost of the business travel.

Linky - HMRC guide 490 Employee travel A tax and NICs guide for employers, page 32

(edit - OK, Martin beat me to it)

[unixman]

Thank you both for the quick response. I looked around the document. It does list these definitions. However, it still does not seem to make a clear statement that answers the question. I will continue reading, however.

I also have a contact who is taking it up with his accountants.

[unixman]

Re the document.

Section 1.7 explains that tax relief can be obtained on the "full cost of traveling", as long as it is not "ordinary commuting".

Section 1.8 shows examples, establishing that travel to a "temporary workplace" is not "ordinary commuting", and tax can therefore be reclaimed.

Sections 3.09 and 3.11 further define what a temporary workplace is.

Section 3.12 and after says a temporary workplace can become a permanent workplace after 24 months.

So far so good.

Section 5.4 says that the cost of business travel can include accommodation and subsistence.
Section 5.5 establishes that tax can sometimes be reclaimed for the cost of accommodation and subsistence.

All of which kind-of suggests that the 24 month rule applies to accommodation. But does not actually say so and seems to be open to interpretation and discussion. The document does not seem to have been designed for our situation.

[TheCoconutDog]

Re the document.

Section 1.7 explains that tax relief can be obtained on the "full cost of traveling", as long as it is not "ordinary commuting".

Section 1.8 shows examples, establishing that travel to a "temporary workplace" is not "ordinary commuting", and tax can therefore be reclaimed.

Sections 3.09 and 3.11 further define what a temporary workplace is.

Section 3.12 and after says a temporary workplace can become a permanent workplace after 24 months.

So far so good.

Section 5.4 says that the cost of business travel can include accommodation and subsistence.
Section 5.5 establishes that tax can sometimes be reclaimed for the cost of accommodation and subsistence.

All of which kind-of suggests that the 24 month rule applies to accommodation. But does not actually say so and seems to be open to interpretation and discussion. The document does not seem to have been designed for our situation.

There's more info in the Finance Act 1998.

See:

http://www.legislation.gov.uk/ukpga/1998/36/section/61

http://www.legislation.gov.uk/ukpga/1998/36/schedule/10

[unixman]

My accountant has now done a reverse ferret and declared that the 2 year rule does cover all expenses associated with travel, nor just the mileage allowance. This came in writing from the senior guy. The above linked documents also seem to agree (but don't say it in so many words)

So I can no longer claim room rent (or the cost of a hotel), or the £5 per overnight allowance, or any mileage allowance for the car. That's good enough for me and seems definitive.

[TykeMerc]

My accountant has now done a reverse ferret and declared that the 2 year rule does cover all expenses associated with travel, nor just the mileage allowance. This came in writing from the senior guy. The above linked documents also seem to agree (but don't say it in so many words)

So I can no longer claim room rent (or the cost of a hotel), or the £5 per overnight allowance, or any mileage allowance for the car. That's good enough for me and seems definitive.

Correct at the point that the reasonable expectation is you will be working at that location past 24 months all travel and subsistence claims against tax should stop. That includes accommodation, food and incidentals.

[SlipTheJab]

Correct at the point that the reasonable expectation is you will be working at that location past 24 months all travel and subsistence claims against tax should stop. That includes accommodation, food and incidentals.

I have made sure that my current contract finishes the day before the 24 month rule kicks in for me, whether I renew or not depends on whether they will agree to an 10% increase, there is a reasonable expectation that they will not so I can still claim up to then?

[northernladuk]

I have made sure that my current contract finishes the day before the 24 month rule kicks in for me, whether I renew or not depends on whether they will agree to an 10% increase, there is a reasonable expectation that they will not so I can still claim up to then?

But is there a reasonable expectation they will renew you again? Splitting the dates just to meet it may fail some undergo inspection in the future. You have 6 month renewals and then all of a sudden you have a 5 month and then 1 mother just at the 24 months limits may raise some eyebrows. Not hard to defend would think but just something to be aware of.