Reply to: 24 Month Rule

[ASB]

Good post above, raises the important point that YourCo is quite entitled to continue paying your travel expenses even after the two year rule has been breached, they simply stop being allowable (so you would still enter the Box N value from your P11D on your SA but you wouldn't be able to claim it as a business expense so you will be taxed on it). Or, as pointed out above, the P11D/SA faff can be avoided completely by just putting it through the payroll so it's taxed at source.

There might be an ni issue with the above of course. If you are base rate payer then there ie ee ni. As a higher rate payer personally the ee ni is irrelevant. In both cases of course there is ers.

If it were paid through exs and not reclaimed then the er would pay ers. So thats neutral. But not sure what the ee situation would be.

From the point of view of the average contractor jist pay it personally and accept the effective tax only hit by increasing divis looks like tge obvious answer to me.

[TheCyclingProgrammer]

Good post above, raises the important point that YourCo is quite entitled to continue paying your travel expenses even after the two year rule has been breached, they simply stop being allowable (so you would still enter the Box N value from your P11D on your SA but you wouldn't be able to claim it as a business expense so you will be taxed on it). Or, as pointed out above, the P11D/SA faff can be avoided completely by just putting it through the payroll so it's taxed at source.

[ASB]

Its not applicable to directors of other Co's that are not PSC's - surely it goes against some free trade rule.

In what way is it not applicable to directors/employees of other enterprises ? I think you are mistaken.

In my case I am an employee of a multinational. They will happily pay my t + s expenses for travel from my contracted office.

However, if I am on assignment for > 2 years they will still pay them. However they cease to be allowable.

Procedurally for the first 2 years they don't get declared on p11 etc because of the corporate dispensation. After this period they are paid through payroll as extra salary - they don't have to do it that way it's just easier. Equally some expense which I claim that are not allowable from a taxation pov are just paid through payroll.

I do have some sympathy, in this day and age of a lot of mobile an transient working often basing in different offices (both employee and contractors) and the comparatively short duration of these it is difficult. It is a rule that doesn't fit in too well with the current working world in some ways, but nevertheless it is the rule that is enshrined in law.

[Podgy]

Apart from the frequency of travel, how has the journey changed from before?

Its changed because I did relocate to decided if I wanted to relocate permanently so my journey was 10mins each way.

I have decided I dont want to relocate permanently so my journey is now 2.5hrs each way.

I guess if some contractors had'nt taken the complete piss in the first place there would be no need for this rule in relation to a genuine business need.


Maybe you should sue the agency / client / HMRC, kittycat.

Its not applicable to directors of other Co's that are not PSC's - surely it goes against some free trade rule.

[DirtyDog]

I'm aware of the 40% rule and that its not applicable yet but just wondered as the journey has changed significantly.

Apart from the frequency of travel, how has the journey changed from before?

I can understand the sense in the rule but it is a business expense - I will get no benefit from staying in Travelodge!

Maybe you should sue the agency / client / HMRC, kittycat.

[eek]

Thanks for your replies.

I'm aware of the 40% rule and that its not applicable yet but just wondered as the journey has changed significantly.

I had already stopped claiming when I knew I would be over the 24 months - that was some time back.

I dont want to relocate to the area permanently so will be going back home - so the journey has significantly changed (i.e. the distance).

I can understand the sense in the rule but it is a business expense - I will get no benefit from staying in Travelodge!

Yes you do. If your journey is anything like mine I get 1 hour 50 minutes extra in bed (1 hour each way compared to 5 minutes)

[cojak]

Thanks for your replies.

I'm aware of the 40% rule and that its not applicable yet but just wondered as the journey has changed significantly.

I had already stopped claiming when I knew I would be over the 24 months - that was some time back.

I dont want to relocate to the area permanently so will be going back home - so the journey has significantly changed (i.e. the distance).

I can understand the sense in the rule but it is a business expense - I will get no benefit from staying in Travelodge!

Your journey has NOT substantially changed in the physical sense - you've not changed location, just changed the duration of your journey. It doesn't matter and HMRC don't care.

You're caught - end of.

[Podgy]

Thanks for your replies.

I'm aware of the 40% rule and that its not applicable yet but just wondered as the journey has changed significantly.

I had already stopped claiming when I knew I would be over the 24 months - that was some time back.

I dont want to relocate to the area permanently so will be going back home - so the journey has significantly changed (i.e. the distance).

I can understand the sense in the rule but it is a business expense - I will get no benefit from staying in Travelodge!

[Bunk]

As 99% of the other posters said, it doesn't matter a flying fart what your new arrangement is - if you were staying over 5 days a week previously when you discovered your contract extension will take you over 24 months you will NOT be able to claim expenses for that LOCATION. The only way you can claim again is by working at another location for 14.4 months* before returning.

For example, I was unable to claim expenses for the last 6 months of my contract in London. I left in March 2013 and so I will not be able to take another contract there until June 2014.

It's not a difficult rule to understand, only to accept.

(*Some accountants say 6 months, some say 9 months but this is playing with the 40% ruling. But 14.4 months is the straight calculation for working 5 days a week for 2 years.)

WSS

The 40% rule is an average over the previous 24 months. So switching to 2 days a week may be 40% of that week but the previous 24 months of 5 days a week brings the average way up.

[cojak]

24 Month Rule

As 99% of the other posters said, it doesn't matter a flying fart what your new arrangement is - if you were staying over 5 days a week previously when you discovered your contract extension will take you over 24 months you will NOT be able to claim expenses for that LOCATION. The only way you can claim again is by working at another location for 14.4 months* before returning.

For example, I was unable to claim expenses for the last 6 months of my contract in London. I left in March 2013 and so I will not be able to take another contract there until June 2014.

It's not a difficult rule to understand, only to accept.

(*Some accountants say 6 months, some say 9 months but this is playing with the 40% ruling. But 14.4 months is the straight calculation for working 5 days a week for 2 years.)

[malvolio]

Missed the last sentence before I responded. It is a possibility.

Nope (he says again). IMVHO.


Same journey, same location, different frequency perhaps. But other engagements don't apply; this is no longer a temporary workplace. The 40% rule applies to this "journey" for the 24 months preceding the anticipated end of the contract.

[ASB]

Technically you should have exhausted the 24 month rule BEFORE you were there 2 years. It should have been when you knew you were going to be there so probably before the extension that took you over 2 years.

For your current situation you want to read up on the 40% rule as well.

Missed the last sentence before I responded. It is a possibility.

[ASB]

I've just exhausted the 24 month rule by working for the same client over 2yrs and rented temporary accommodation for the duration.

I now will continue at the same site/client but for only 2 days pw and will be living back to my main residence some 150 miles away, so will stay just 1 night pw in hotel.

As my journey to my 'temporary' workplace has substantially changed - will this reset the 24month clock?

I would not dispute the general prognosis of no. But there is a possibility that if you are doing substantive work from other locations it might just be covered under the 40% ruling. Unlikely, but depending upon the overall circs of your business not impossible.

[Andrew@Wisteria]

Nope.

Agree, caught by 24 month rules.

Per EIM32080

A workplace is a temporary workplace if an employee goes there only to perform a task of limited duration or for a temporary purpose. So even where an employee attends a workplace regularly, it will be a temporary workplace and so not a permanent workplace, if the employee attends for the purpose of performing a task of limited duration or other temporary purpose.

[northernladuk]

I've just exhausted the 24 month rule by working for the same client over 2yrs and rented temporary accommodation for the duration.

I now will continue at the same site/client but for only 2 days pw and will be living back to my main residence some 150 miles away, so will stay just 1 night pw in hotel.

As my journey to my 'temporary' workplace has substantially changed - will this reset the 24month clock?

Technically you should have exhausted the 24 month rule BEFORE you were there 2 years. It should have been when you knew you were going to be there so probably before the extension that took you over 2 years.

For your current situation you want to read up on the 40% rule as well.