Two year expenses rule

[PaulF]

Hi guys.

I'm coming up to my two years working on a contract and am looking to continue on it for at least another year.

Are there any ways to avoid the two year expenses rule as I'd be losing quite a chunk if I were to no longer claim expenses.

I've been told I could liquidate my current limited company and create a new one, although I'd rather not go down that road if I can help it.

Are there any other ways to get around it that you know of?

Thanks.

Paul

[Moscow Mule]

So you'd like to know if there's any way we can help you break the law?

No, sorry.

FWIW, you're already in the wrong because you know you'll be there over 2 years now.

Either move or get a higher rate to cover your expenses.

[pmeswani]

Hi guys.

I'm coming up to my two years working on a contract and am looking to continue on it for at least another year.

Are there any ways to avoid the two year expenses rule as I'd be losing quite a chunk if I were to no longer claim expenses.

I've been told I could liquidate my current limited company and create a new one, although I'd rather not go down that road if I can help it.

Are there any other ways to get around it that you know of?

Thanks.

Paul

I don't know if going to an Umbrella when the extension is provided is a legal option?

[TheBigYinJames]

I don't know if going to an Umbrella when the extension is provided is a legal option?

Surely business expense limits are per person, not per company?

[thunderlizard]

Surely business expense limits are per person, not per company?

That is correct. You could set up a complex chain of intermediary companies to work through, but as long as it's still PaulF going to site X for more than 2 years, any travel benefit you get is taxable.

[pmeswani]

Surely business expense limits are per person, not per company?

I wasn't suggesting it from that angle. :-)

[Spacecadet]

you're not breaking the law already, as you're only looking to extend, you haven't confirmed the extension yet.

The only way I can see for you to stop loosing out will be to negotiate plenty of home working. This will need to be at least 60%... i.e. at least 3 out of 5 days out of the office... after 2 years you could well be in a position to negotiate blaming pressures at home.
Alternatively, if they have offices in many locations with the project team spread around then switch to a different office.

You don't say if you're staying over night or commuting on a daily basis. If you're commuting then its probably easiest taking the hit

[The Lone Gunman]

Hi guys.

I'm coming up to my two years working on a contract and am looking to continue on it for at least another year.

Are there any ways to avoid the two year expenses rule as I'd be losing quite a chunk if I were to no longer claim expenses.

I've been told I could liquidate my current limited company and create a new one, although I'd rather not go down that road if I can help it.

Are there any other ways to get around it that you know of?

Thanks.

Paul

As others have said, changing companies does not work.
You take the hit, up your rate to cover or move on.

The thinking behind the 2 year rule is very simple: HMRC believes that any employee should either have moved closer to work or found another job within commuting distance inside 2 years. Outside the 2 years it is your choice to commute and therefore you are not entitled to expenses.

I know there are lots of valid arguments against this, but thems the rules.

[NotAllThere]

It's an improvement of what was in place before, where, except for some inspectors, you couldn't claim home to office mileage at all.

[BolshieBastard]

I've been told I could liquidate my current limited company and create a new one, although I'd rather not go down that road if I can help it.

Despite what some will tell you (I see some already have) you can close your company and start a new one then claim mileage again. My accountant also suggested I do this but I closing the ltd co doesnt appeal to me.

A colleague of mine's accountant (different accountants to mine) has also told him he can claim beyond 2 years and he's waiting clarification on this.

Dont forget, you can also claim part of the VAT element of your fuel even if you are claiming mileage and even AFTER 2 years. You do have to be VAT registered and not on the VAT flat rate scheme though.