Reply to: 24 month rule affects hotel?

[WordIsBond]

Indeed and if you are 12 month contracts it could fall that is at the beginning of the 2nd contract. Ouch!

Yeah, I suppose if someone has significant travel expenses they should not sign a second 12 month contract. Put a termination date on it a week before. Use your brain. You are going to want a higher rate once the two year thing kicks in.

[northernladuk]

Not completely true. The 24 month rule kicks in as soon as you expect to go over two years.

Indeed and if you are 12 month contracts it could fall that is at the beginning of the 2nd contract. Ouch!

[LondonManc]

Not completely true. The 24 month rule kicks in as soon as you expect to go over two years.

[LondonManc]

The whole problem is thinking like an employee and not a business.

As a business if you can make a profit sending someone 200 miles away, after all costs, then you would. And if that contract extends to 2, 3 or even 10 years you would, but unless you'd some form of long-term guarantee you may not employ someone local to do it. It all depends.

I spent years travelling with businesses, not once did anyone talk of '24 month' rules.

But then these were businesses, and not disguised employment - so become a business.

As jmo said, it's not about not being a business, it's about HMRC. If you're running a business and have two key clients in different towns, you're not going to move house and move your office to be near the other one if you're in the same town as the first.

[jmo21]

What an odd way of thinking of it. If I'm a contractor, why would I move house to be near a contract?

Not in the slightest.

No-one is stopping you, you are simply being extended a tax break for a certain period of time. And it's not my thinking, it's HMRC's :-)

[b r]

The whole problem is thinking like an employee and not a business.

As a business if you can make a profit sending someone 200 miles away, after all costs, then you would. And if that contract extends to 2, 3 or even 10 years you would, but unless you'd some form of long-term guarantee you may not employ someone local to do it. It all depends.

I spent years travelling with businesses, not once did anyone talk of '24 month' rules.

But then these were businesses, and not disguised employment - so become a business.

[LondonManc]

Look at it more as why should the tax payer continue to help you after a certain point?

What an odd way of thinking of it. If I'm a contractor, why would I move house to be near a contract?

[jmo21]

What is annoying is the virtual restraint of trade that the 24-month rule brings in. If I've implemented a successful project at one client over the last 20 months, why can't I leverage that knowledge at a local rival of theirs without falling foul of the expenses rule? In effect, you're going from £80ish to £140ish for a £100-a-night hotel.

Look at it more as why should the tax payer continue to help you after a certain point?

[LondonManc]

This is incorrect if you are a PAYE employee as your post reads a bit strange - are you a contractor or PAYE employee?

As a contractor the company could pay these costs for you but you'd then be then creating BIK.

FWIW I reckon you'll find most contractors just claim the costs irrelevant - as if you were a PAYE employee your company would pickup the costs anyway.

What is annoying is the virtual restraint of trade that the 24-month rule brings in. If I've implemented a successful project at one client over the last 20 months, why can't I leverage that knowledge at a local rival of theirs without falling foul of the expenses rule? In effect, you're going from £80ish to £140ish for a £100-a-night hotel.

[b r]

So the company was quite correct to stop these expenses.

This is incorrect if you are a PAYE employee as your post reads a bit strange - are you a contractor or PAYE employee?

As a contractor the company could pay these costs for you but you'd then be then creating BIK.

FWIW I reckon you'll find most contractors just claim the costs irrelevant - as if you were a PAYE employee your company would pickup the costs anyway.

[LondonManc]

Hang on, are the coverage of expenses explicitly in the contract? If so, that's different to a personal travel and accommodation expense.

[WordIsBond]

Not immediately. You need to look back at the previous 24 months at any given point and see if you've been working there more than 40% of the time so it would be a while before you would drop below the 40% threshold (I can't be bothered to work out exactly when).

Right you are, that was careless of me. Yes, it's based on the average time for the entire term of the engagement. So if he's been at 60% for 2 years, it would take a long time to bring the average down to 40%.

Thanks, guys, for picking up on that and correcting my error.

[ChimpMaster]

Not immediately. You need to look back at the previous 24 months at any given point and see if you've been working there more than 40% of the time so it would be a while before you would drop below the 40% threshold (I can't be bothered to work out exactly when).

If you've been on-site 60% of the time for 2 years then at a very basic calculation you would have to work on-site for only 20% of the time for the next 2 years to get down to 40%. So I guess after 4 years you could restart claiming expenses!

[TheCyclingProgrammer]

Even though he's already been there 2 years, are you saying (for example) that he could now switch to 2 days client office / 3 days WFH and then restart claiming expenses?

Not immediately. You need to look back at the previous 24 months at any given point and see if you've been working there more than 40% of the time so it would be a while before you would drop below the 40% threshold (I can't be bothered to work out exactly when).

[ChimpMaster]

If you could WFH or from a different client site every other week you'd be under the 40% barrier. Even if it is a client site on the Continent, that might end up saving you money.

Obviously that's not often practical.

Even though he's already been there 2 years, are you saying (for example) that he could now switch to 2 days client office / 3 days WFH and then restart claiming expenses?