Reply to: Moving from umbrella to ltd on renewal

[ContrataxLtd]

But wouldn't he still fail the 40% rule? He has still been there over 40% of the time over a two year period regardless where his permanent place assumed to be?

The 40% rule would only kick in once he's been there, or expects to be there over 24 months. Up until that point, the contract, in my opinion is at a temporary workplace.

Martin
Contratax Ltd

[northernladuk]

Hi Spelling Bee

Just to give my 2p's worth.

Joe's time at Bank #1 was a permanent location because he had no other location for work i.e. had had to work at the bank under that employment. Now that he's gone contracting his permanent location is his home office and Bank #2 becomes a temporary location so he can start claiming travel expenses up until the point he expects to be at that same location for over 24 months which in this case appears to be for the first 6 months of contracting there.

One thing a lot of people forget it that for a location to be temporary there has to be another location that is the permanent location, if there isn't then by default the first location is a permanent one and it is for this reason that employees can't claim for ordinary commuting.

HTH

Martin
Contratax Ltd

But wouldn't he still fail the 40% rule? He has still been there over 40% of the time over a two year period regardless where his permanent place assumed to be?

[northernladuk]

I meant NLUK really.

But if the cap fits....

[speling bee]

I meant NLUK really.

[Clare@InTouch]

Why have a dog and bark yourself?

[speling bee]

Try a search

Why have a dog and bark yourself?

[northernladuk]

I've heard this. How does this state of affairs come about?

Try a search

[ContrataxLtd]

That doesn't make sense to me. If I have no Ltd company and no job and get a temp job at an office for a week, are you saying that it is a permanent workplace because it cannot be a temporary workplace because there is no other permanent workplace?

Yes.

You would presumably be either employed by the actual client/employer on their payroll in which case it's a permanent workplace (even if it will only be for a day) or you will be employed by an agency and still probably couldn't claim anything because your permanent workplace would be the end client and not the agency (unless they have an umbrella type contract with an overarching contract of employment).

Clare has covered the Umbrella point which also covers this nicely too.

Martin
Contratax Ltd

[speling bee]

It's due to the fixed term appointment rule.

EIM32125 - Travel expenses: travel for necessary attendance: fixed term appointments and agency workers: fixed term appointments

A period of attendance at a workplace for a limited duration does not make that place a temporary workplace if the employee attends in the course of a period of continuous work (see EIM32080) that can be expected to last for all, or almost all, of the period for which he or she is likely to hold, or continue to hold, that employment. In these cases the 24 month rule (see EIM32080) is overridden and the workplace is a permanent workplace.

Thanks Clare.

[Clare@InTouch]

I've heard this. How does this state of affairs come about?

It's due to the fixed term appointment rule.

EIM32125 - Travel expenses: travel for necessary attendance: fixed term appointments and agency workers: fixed term appointments

A period of attendance at a workplace for a limited duration does not make that place a temporary workplace if the employee attends in the course of a period of continuous work (see EIM32080) that can be expected to last for all, or almost all, of the period for which he or she is likely to hold, or continue to hold, that employment. In these cases the 24 month rule (see EIM32080) is overridden and the workplace is a permanent workplace.

[speling bee]

Don't forget resigning from the umbrella after only one assignment automatically makes it the perm workplace.

I've heard this. How does this state of affairs come about?

[speling bee]

More by definition than anything, for someone to be going somewhere for a temporary basis there has to be somewhere that the go to permanently at other times.

That doesn't make sense to me. If I have no Ltd company and no job and get a temp job at an office for a week, are you saying that it is a permanent workplace because it cannot be a temporary workplace because there is no other permanent workplace?

[northernladuk]

Don't forget resigning from the umbrella after only one assignment automatically makes it the perm workplace.

[ContrataxLtd]

Thanks, Martin. But where does it say there must be a permanent location. That's news to me.

More by definition than anything, for someone to be going somewhere for a temporary basis there has to be somewhere that the go to permanently at other times.

By default, all workplaces are permanent unless they are temporary:

Travel expenses: travel for necessary attendance: definitions: permanent workplace

and in particular:

A workplace is not a permanent workplace if it is a temporary workplace. A temporary workplace is somewhere the employee goes only to perform a task of limited duration or for a temporary purpose. The cost of travel to a temporary workplace is deductible.

Martin
Contratax Ltd

[speling bee]

Hi Spelling Bee

Just to give my 2p's worth.

Joe's time at Bank #1 was a permanent location because he had no other location for work i.e. had had to work at the bank under that employment. Now that he's gone contracting his permanent location is his home office and Bank #2 becomes a temporary location so he can start claiming travel expenses up until the point he expects to be at that same location for over 24 months which in this case appears to be for the first 6 months of contracting there.

One thing a lot of people forget it that for a location to be temporary there has to be another location that is the permanent location, if there isn't then by default the first location is a permanent one and it is for this reason that employees can't claim for ordinary commuting.

HTH

Martin
Contratax Ltd

Thanks, Martin. But where does it say there must be a permanent location. That's news to me. E.g.

EIM32075 - Travel expenses: travel for necessary attendance: definitions: temporary workplace

EIM32075 - Travel expenses: travel for necessary attendance: definitions: temporary workplace
Section 339(3) ITEPA 2003
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.

Limited duration is explained at EIM32080.

Temporary purpose is explained at EIM32150.

If a workplace is capable of being a temporary workplace by reference to this rule, you must consider the following additional rules:

the 24 month rule, see EIM32080
the fixed term appointment rule, see EIM32125
the depots and bases rule, see EIM32160
the area rule, see EIM32190
These rules can only apply if the workplace is capable of being a temporary workplace by reference to S339(3).