The 24 Month Rule in a nutshell

[TheFaQQer]

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

That would be my understanding of the rule, but I didn't get that impression from Forbes Young's post - it seemed to imply that you could claim the travel to a hotel and then just not claim the journey from hotel to work.

Which (to be blunt) sounds like a load of bollocks to me.

[LisaContractorUmbrella]

That would be my understanding of the rule, but I didn't get that impression from Forbes Young's post - it seemed to imply that you could claim the travel to a hotel and then just not claim the journey from hotel to work.

Which (to be blunt) sounds like a load of bollocks to me.

Yep I agree

[Contreras]

Precisely. The only continuing allowable expense is from your new permanent place of work to some other client location on business,

Agree.

and even then, strictly speaking, you should deduct the normal daily journey distance.

That's a myth.

All in all, I prefer my original version

Well you would. Opinions which challenge the established view are welcome on this forum where supported by facts, otherwise it's hearsay.

[JRCT]

My current contract is up in March, if I get offered an extension beyond June, then it's going to take me over the 24 months.

I've ran this past my accountant, and he confirms my understanding but I've seen similar questions asked here before but never answered so I thought I would post this for comments or clarity if anyone is in a similar situation or believes I've got this wrong.


Let's say my annual travel expenses are £5k. So far, my ltd has been paying that and has claimed tax relief on it. Meaning no cost to me personally, and effectively a £4k cost to my ltd, rather than £5k (the tax saving bit).

It's only the tax saving bit that is affected by the 24 month rule so I am going to continue to allow my ltd to pay the £5k as a cost of doing business. This means STILL no cost to me personally but the full £5k cost to my ltd.

As my ltd pays me a tax free salary and dividends up to (not into) the higher rate limit, I won't have to take an extra £5k of dividends at the higher rate to cover the £5k cost of travel.

As this is completely work related travel there is no BIK due for me, personally, on this £5k.


Is this the correct approach to take under these circumstances?

[tractor]

...

My current contract is up in March, if I get offered an extension beyond June, then it's going to take me over the 24 months.

I've ran this past my accountant, and he confirms my understanding but I've seen similar questions asked here before but never answered so I thought I would post this for comments or clarity if anyone is in a similar situation or believes I've got this wrong.


Let's say my annual travel expenses are £5k. So far, my ltd has been paying that and has claimed tax relief on it. Meaning no cost to me personally, and effectively a £4k cost to my ltd, rather than £5k (the tax saving bit).

It's only the tax saving bit that is affected by the 24 month rule so I am going to continue to allow my ltd to pay the £5k as a cost of doing business. This means STILL no cost to me personally but the full £5k cost to my ltd.

As my ltd pays me a tax free salary and dividends up to (not into) the higher rate limit, I won't have to take an extra £5k of dividends at the higher rate to cover the £5k cost of travel.

As this is completely work related travel there is no BIK due for me, personally, on this £5k.


Is this the correct approach to take under these circumstances?

Not sure but do not forget that the allowances end at the point you become aware that you will breach the 24 month limit.

[Contreras]

As my ltd pays me a tax free salary and dividends up to (not into) the higher rate limit, I won't have to take an extra £5k of dividends at the higher rate to cover the £5k cost of travel.

As this is completely work related travel there is no BIK due for me, personally, on this £5k.

No, sorry, there will be BiK. That's the whole point of the 24m rule. It's no longer a temporary location so no loner a work expense. The company can pay for it (and claim relief) but it's taxable personally.

The alternative is to take the money by another means, i.e. increased dividends. If that pushes you into high rate band then the same would be the case if it were treated as BiK.

[malvolio]

Sure you're not mixing up corporate and personal money here? The tax due is personal to you, since the expenses become a Benefit in Kind and so are treated as salary. If YourCo buys the train ticket, rather than you buying it yourself and expensing it, you are still liable for income tax on its cost.

[JRCT]

No, sorry, there will be BiK. That's the whole point of the 24m rule. It's no longer a temporary location so no loner a work expense. The company can pay for it (and claim relief) but it's taxable personally.

The alternative is to take the money by another means, i.e. increased dividends. If that pushes you into high rate band then the same would be the case if it were treated as BiK.

Sure you're not mixing up corporate and personal money here? The tax due is personal to you, since the expenses become a Benefit in Kind and so are treated as salary. If YourCo buys the train ticket, rather than you buying it yourself and expensing it, you are still liable for income tax on its cost.

Ok, thanks. I'll go back to my acountant and double check with them. I specifically asked this and was told there would be no BIK.

[JRCT]

Just checked and you are both absolutely right, so thanks for that.

As soon as I know it's going to be over 24 months, I just stop putting it through the business completely and I pay it myself.

[tractor]

...

Just checked and you are both absolutely right, so thanks for that.

As soon as I know it's going to be over 24 months, I just stop putting it through the business completely and I pay it myself.

Best not to make the decision yet then eh?