2 yr rule - am I losing out?

[Beefy198]

People say IR35 is vague - I think it's pretty clear that the 2 year rule is worse.

From the overlords themselves:

An employee may change his or her workplace without that change having any substantial effect on his or her journey to work..... Sometimes it may be difficult to decide whether a change of workplace should be recognised. The basic principle is that a change in the location or the boundaries of a workplace will be recognised as a change of workplace where the change has a substantial effect on:

* the journey an employee has to make to get to work and, in particular,
* the cost of that journey.

In practice you should recognise the change of workplace in all cases except where the change has made no significant difference to the commuting journey.

So no real definition of 'substantial', but if you were to use the same monthly travelcard to go into a part of London, and I'm guessing that maybe the station you get off on doesn't matter too much, then that might not be a recognisable change (note the use of guessing and much because I don't really know)

[youngguy]

"Up your rate" means charge the client (agency) more to cover the reduction. It doesn't mean "pay yourself more".

Thanks. The reason I said that was because for me to have the same money in my pocket means paying myself more (the more would cover the travel expenses!)

I don't think I could stay on one contract for more than 2 years anyway. My limit is usually 12 months and by then I ready to move on

Surly that's what contractings about

I haven't been in the same contract or even at the same company, but as my travel costs and rough location (same part of London) remain the same the rule kicks in.

[pmeswani]

Roughly - I'm not sure I've seen a legal precedent, but you won't as it's the HMRC who decide.

It's arguable either way. To get to any of those sites from Reading you'd need a travelcard, so your expenditure isn't changing.

I would find it hard to accept that HMRC would penalise contractors who work in London for 2+ years, especially when they are working in different parts of London over that time for different clients. It would effectively (even though not demonstrated in big numbers from what I can gather) drive all the contractors out of London in 2 year periods.

[TheBigYinJames]

So are you saying you work for Coy A in Kings Cross for 1 year, Coy B in Waterloo for another 6 months and then take a contract with Coy C in Canary Wharf it is classed as same site i.e. London, if you commuted from Reading for example?

I can't say for sure because the regs are pretty vague about what constitutes "susbstantially" the same journey. I'm not sure how far from London you need to be before anything in London is classed as "substantially" the same site, or even if it ever does. I suspect Reading would be OK. You may wish to ask them before going over your 2 years.

I think it's designed to stop people saying they are working at a new site when all they've done is move to the office next door, so if you've genuinely moved to other companies, they may be more lenient. But asking is safest.

[Moscow Mule]

So are you saying you work for Coy A in Kings Cross for 1 year, Coy B in Waterloo for another 6 months and then take a contract with Coy C in Canary Wharf it is classed as same site i.e. London, if you commuted from Reading for example?

Roughly - I'm not sure I've seen a legal precedent, but you won't as it's the HMRC who decide.

It's arguable either way. To get to any of those sites from Reading you'd need a travelcard, so your expenditure isn't changing.

[Manic]

So are you saying you work for Coy A in Kings Cross for 1 year, Coy B in Waterloo for another 6 months and then take a contract with Coy C in Canary Wharf it is classed as same site i.e. London, if you commuted from Reading for example?

[TheBigYinJames]

Anybody any idea how that plays with the 2 year rule?

2 year rule applies to a site you spend more than 40% of your time at. So if you are spreading your time equally about your three clients and your base, then the rule won't apply to you.

If you spend more than 40% at one of them, then you won't be able to claim the expenses associated with THAT client after 2 years.

Bear in mind also, that if your three clients are lumped together, and your journey is mostly the same for each one, then they count as a single site.

[AlanR]

More than 1 client?

Hi,

Sorry for hijacking this thread but this is an issue i have been thinking about recently myself but from a different angle / set of circumstances.

I understand the '2 Year Rule' as it applies if you have a single client / place of work but i currently have 3 clients and so have 3 different places of work, 4 if you count my own office (which i do use as a place of work and not simply a 'base') and so i dont neccessarily travel to the same place of work each day, for example before this week is finished i will have travelled to / visited all 3 clients. In the past i have had reason to visit all 3 in the same day.

Anybody any idea how that plays with the 2 year rule?

Alan

[pmeswani]

I don't think I could stay on one contract for more than 2 years anyway. My limit is usually 12 months and by then I ready to move on

Surly that's what contractings about

And there I thought contracting was about bringing expertise to the company. The IR35 issue only holds back people's desire to stay longer than 2 years.

[badger7579]

I don't think I could stay on one contract for more than 2 years anyway. My limit is usually 12 months and by then I ready to move on

Surly that's what contractings about

[NotAllThere]

I... I know many people on here say to up your rate ... but if I pay myself more then I use up more of my personal allowance ...

"Up your rate" means charge the client (agency) more to cover the reduction. It doesn't mean "pay yourself more".

[TheBigYinJames]

If you've been there for more than 2 years at the same site, HMRC considers you can't really claim you're travelling to a 'temporary workplace' which is what those expenses are supposed to be for. After 2 years it becomes your permanent workplace.

So the choice is to pay up, ask for more money, or move jobs.

[VectraMan]

Errr yes. You lose out by having to pay tax on what was expenses.

[youngguy]

I am trying to work out the effect that the 2 yr rule will have on me. My basic understanding is that I can no longer claim ‘everyday travel’ expenses from my office (home) to my place of work (site). I know many people on here say to up your rate to cover the travel costs, but if I pay myself more then I use up more of my personal allowance don’t I?

For example
Personal allowance is £38k for the year.
Take £2500 a month “salary” = £30k for the year
Draw £300 travel expenses a month = £3600
Take “top up divi’s” of £8k
Total in my pocket = £41,600

Now with the 2 ur rule
Take £2500 a month “salary” = £30k for the year (and have to spent £300 a month on travel)
Draw no travel expenses a month = £0
Take “top up divi’s” of £8k
Total in my pocket = £38k