Reply to: 24 month rule resetting the clock

[northernladuk]

my question is in the title ...

thanks in advance

Is this the only gig you are doing with the umbrella? If so it will be your perm location from day one and you can't claim a thing... obviously you did join with the 'intention' of doing more

[centurian]

Not entirely true when Companies House relocated 50% of their staff to another office only 7-8 miles down the road their staff were given mileage allowance. Just saying like

Nothing wrong with giving them a mileage allowance - but that allowance should have been fully taxable - from day one.

In an NHS gig, there was a permie who was whining after being told that her relocation expenses would now be taxable after 2 years, although they also cocked up the interpretation - it should have taxable on day one. "But I have it in writing that I would be paid expenses for 5 years" she moaned. Left before it came to conclusion, but I think she wanted them to cover the tax difference as well (and the tax on that etc.).

[IPMAN]

So does this rule apply to Umbrella only, or Ltd too?

Your Umbrella company is talking a load of old rubbish.

The 24 month rule has nothing to to with employment, it has EVERYTHING to do with location.

See here for details: http://forums.contractoruk.com/accou...ml#post1696559

my question is in the title ...

thanks in advance

[malvolio]

Yep. I had same when working in IT for NHS many years ago. Spartie will know the locations - city centre to cardiff bay. Paid for 2 years if I remember correctly.

Gosh. You mean after 24 months you were no longer eligible for travel expenses payment due to office relocations....

So what does that have to do with contractors claiming mileage. Oh, hang on...

[psychocandy]

Not entirely true when Companies House relocated 50% of their staff to another office only 7-8 miles down the road their staff were given mileage allowance. Just saying like

Yep. I had same when working in IT for NHS many years ago. Spartie will know the locations - city centre to cardiff bay. Paid for 2 years if I remember correctly.

[northernladuk]

FTFY, but yes you are right I agree with you. Alternatively could you get the client to cover travel expenses? If you were critical to the project

Of course and that is a perfectly good point, or get your rate altered to cover. If your circumstances are going to change then alter your rate at renewal to reflect it makes good business sense. Saying that, going in and demanding a rate rise because you can't claim mileage/subsistence anymore isn't the way to do it IMO. Asking for a rate rise due to business costs going up would be much more suitable.

[The Spartan]

Indeed but isn't that mileage allowance a hit on the Taxpayer, not taxable? There is a difference. The company can pay the staff whatever they want as a sweetner to make up for the inconvenience, whether they can claim it back on tax is a different thing.

FTFY, but yes you are right I agree with you. Alternatively could you get the client to cover travel expenses? If you were critical to the project

[northernladuk]

Not entirely true when Companies House relocated 50% of their staff to another office only 7-8 miles down the road their staff were given mileage allowance. Just saying like

Indeed but isn't that mileage allowance a hit on the business, not taxable? There is a difference. The company can pay the staff whatever they want as a sweetner to make up for the inconvenience, whether they can claim it back on tax is a different thing.

[The Spartan]

If you have been contracting within commutable distance from home why should you get a tax break on mileage. Permies don't. Claiming tax back on stuff like this isn't a given, it is to help a period of uncertainty. Stop thinking of it as a free ticket and more as a bonus for a long commute.

Not entirely true when Companies House relocated 50% of their staff to another office only 7-8 miles down the road their staff were given mileage allowance. Just saying like

[The Spartan]

But if you work from home you would not be claiming mileage surely

You would have to work out at what point you have worked their less than 40% over a two year rolling window.

That's right apologies NLUK I was also thinking of subsistence and accommodation not just travel.

[northernladuk]

Has anyone ever had to pay back expenses under the 24 month rule if they didn't actually claim expenses for > 24 months? I'm guessing the chances of HMRC investigating someone who hasn't actually claimed over the 24 months are pretty slim.

I imagine they are but is it slim enough to make it worth paying it all back, fines and interest just for a 20% saving mileage? If it is that slim then why not just cook the books properly, put the TV in, redcorate the house as it includes your office, take the spouse out on the company every week etc. I don't see the chance of being investigated part of the decision making when doing your finances properly personally.

[mudskipper]

This is only a mild concern since it will only have a potential detrimental effect IF hmrc ever investigate you. If they dont, they'll be none the wiser.

Has anyone ever had to pay back expenses under the 24 month rule if they didn't actually claim expenses for > 24 months? I'm guessing the chances of HMRC investigating someone who hasn't actually claimed over the 24 months are pretty slim.

[Weller1]

Your Umbrella company is talking a load of old rubbish.

The 24 month rule has nothing to to with employment, it has EVERYTHING to do with location.

See here for details: http://forums.contractoruk.com/accou...ml#post1696559

Yeah exactly as i thought, thanks

[Weller1]

Did you stop claiming as soon as you knew you were going to be there 24 month or at 24 months?

I stopped when i knew i was going up to and beyond 24 months i..e when i accepted a contract extension.

[northernladuk]

I agree the bulk of the good contracts for testing are in London and it would seem counterproductive to move from a location just because of the 24 month rule.

But then when has there been common sense at HMRC.

I think the 24 month rule thing is a complete pain in the @rse and it should be client based. When I come to look for a contract, my preference is to have one a commutable distance from home. Unfortunately these tend to be rarer than rocking horse poo. Since most of the roles that are suitable for me are London based it means that each 2 years or so I have to look to take another contract elsewhere to reset this pointless clock.

But you have to remember who this rule was designed for and it wasn't us. The idea is to help people relocating hence the two years is seen as a reasonable amount of time for you to make a decision if you were going to move closer to the location you are working in. It wasn't designed for 1 man band contractors to claim their subsistence back. If you have been contracting within commutable distance from home why should you get a tax break on mileage. Permies don't. Claiming tax back on stuff like this isn't a given, it is to help a period of uncertainty. Stop thinking of it as a free ticket and more as a bonus for a long commute.