Reply to: Confused Newbie regarding 24 month rule (yes another one)

[Scottt]

Thanks for the advice, I am going to phone the umbrella company today as I get paid today so have nothing outstanding with them, if they don't align their policies to HMRC’s legislation, I will find a company that does.
Scott

[Wanderer]

the umbrella company should align their policies to HMRC’s legislation.

This is probably one of the few situations where an employee can sack their employer if they don't like the way they operate.

[Craig at Nixon Williams]

In an employment situation, then a claim will depend upon the employers expenses policy and if the policy isn’t in line with HMRC’s legislation then it can be sorted out via self-assessment.

In the case of an umbrella company, where the purpose of the umbrella is to pay the contractor and to do it in a manner that is compliant with HMRC – working through an umbrella is ideal for somebody that doesn’t want to involve themselves with tax returns so the umbrella company should align their policies to HMRC’s legislation.

That is only my opinion of course...

Craig

[LisaContractorUmbrella]

I'll just go back to my original point - if your employer will not pay your expenses, then whether they are right or not is a moot point. If they are wrong, then you claim it back via your self assessment. If they aren't, then you don't claim it back.

OK

[DirtyDog]

The contracts will now cover a 36 month period - without knowing full details of his travel so I could determine whether or not 40% of his time was spent at more than one location over any 24 month period I would not be able to say for certain.

I'll just go back to my original point - if your employer will not pay your expenses, then whether they are right or not is a moot point. If they are wrong, then you claim it back via your self assessment. If they aren't, then you don't claim it back.

[LisaContractorUmbrella]

So you think that the OP's situation is caught by the 24-month rule?

The contracts will now cover a 36 month period - without knowing full details of his travel so I could determine whether or not 40% of his time was spent at more than one location over any 24 month period I would not be able to say for certain.

[DirtyDog]

If the travel costs are not allowable under HMRC rules then there is no right for the expense to be claimed via the umbrella or via SA

So you think that the OP's situation is caught by the 24-month rule?

The work involves a lot of travel as I cover most of the uk and Ireland and I normally spend between 1 and 2 days at any given site (I go and do work on other company's premises to deliver my company's product)

To give an example I could be in Newcastle on Monday, Aberdeen on Wednesday and Manchester on Thursday.

[LisaContractorUmbrella]

I said that if your employer will not pay your expense, then it doesn't matter if they should or should not - being right is a moot point.

You said it wasn't a moot point because an umbrella company has to stick to HMRC rules on what can and cannot be claimed as an expense.

You point is irrelevant - whether the OP is right or wrong, if his employer will not pay the travel costs as an expense, then the only thing they can do is to correct that via their self assessment.

If the travel costs are not allowable under HMRC rules then there is no right for the expense to be claimed via the umbrella or via SA

[DirtyDog]

That's not what I said at all

I said that if your employer will not pay your expense, then it doesn't matter if they should or should not - being right is a moot point.

You said it wasn't a moot point because an umbrella company has to stick to HMRC rules on what can and cannot be claimed as an expense.

You point is irrelevant - whether the OP is right or wrong, if his employer will not pay the travel costs as an expense, then the only thing they can do is to correct that via their self assessment.

[LisaContractorUmbrella]

So, if HMRC rules say that something can be classed as an expense, an employer MUST reimburse that???

In my last permie job, mileage was paid to employees at 12p a mile. You could claim the difference between that and the HMRC rules on your own tax return, but the company expenses policy was that you got 12p a mile.

From what you say, the company was wrong, and they should have paid 45p a mile, which I don't believe to be correct.

That's not what I said at all

[DirtyDog]

No it isn't a moot point - an umbrella company, as with any other employer, must comply with HMRC rules on what can or cannot be claimed as an expense

So, if HMRC rules say that something can be classed as an expense, an employer MUST reimburse that???

In my last permie job, mileage was paid to employees at 12p a mile. You could claim the difference between that and the HMRC rules on your own tax return, but the company expenses policy was that you got 12p a mile.

From what you say, the company was wrong, and they should have paid 45p a mile, which I don't believe to be correct.

[LisaContractorUmbrella]

Whether they are right or wrong is a moot point - they are your employer, so you need to conform to their expenses policy. If they aren't going to pay expenses for the journey then they will continue to pay that money as salary.

No it isn't a moot point - an umbrella company, as with any other employer, must comply with HMRC rules on what can or cannot be claimed as an expense

[Craig at Nixon Williams]

If they won’t pay you the expenses and your places of work are temporary (less than 40% of your time is spent there) then you could claim the mileage as an employment expense (through self-assessment) so that you save the tax on it – though this isn’t as tax efficient as being paid it in the first instance.

Note that if you do change entity (be it a different umbrella or limited) the 24 months does not reset if you are still based at the same location(s).

Hope this helps!
Craig

[DirtyDog]

My agency has sent a new contract to my umbrella company for another year and my umbrella company have said as this is over the 2 year rule I can not claim for travel anymore.

Whether they are right or wrong is a moot point - they are your employer, so you need to conform to their expenses policy. If they aren't going to pay expenses for the journey then they will continue to pay that money as salary.

[Wanderer]

Some great links from NLUK as usual.

Your case is a bit unusual, there are a few points to make and/or discuss.

Would I be right in my assumption that my assignment with my company could be broken down into each job is an assignment in it's own right? so therefor resets the 24 month rule with every job? (providing reasonable distance between the two)

To quote from HMRC Manual EIM32080: The test is whether the employee has spent, or is likely to spend, 40% or more of his or her working time at that particular workplace over a period that lasts, or is likely to last, more than 24 months

It sounds like you have not spent more than 40% of your time at one location over the past 24 months so I agree that you are probably right and the umbrella is probably wrong. It's about location, location, location rather than about the client you work for. You could have a dozen clients in the City of London over 24 months and you would be caught by the 24 month/40% rule but you could work at a dozen different locations around the country for a client based in the City of London and you would not be caught.

I am also thinking of moving to a new Umbrella company and my agency have given me a list of the company's I can use - Giant, Payco and Zeva, Does anyone has experience of any of these?

If you do this then don't tell the old umbrella you are leaving until after you have been paid because some of them like to pull silly stunts like disallowing your expenses retrospectively which may cause you a lot of hassle especially as in your case the expenses appear to be legitimate.

I am a contractor and have been working with the same company through an agency for 2 years, I have no guarantee of work although the work has been enough to keep me from jumping ship. I usually get told the week before what work I will have for the following week and I don't get paid if there is no work, The work involves a lot of travel as I cover most of the uk and Ireland and I normally spend between 1 and 2 days at any given site (I go and do work on other company's premises to deliver my company's product)

From the little you have told us, it sounds like it's clear that there is no obligation on you or the agency to offer or accept work (mutuality of obligation) and that you carry out the work in your own way, without the direction and control of your clients. This means you may have a strong case for being outside IR35 if you were to trade as a LTD company and there could be some big tax advantages. (Calculator here, tweak the daily rate until it matches your annual turnover).

If your turnover is > ~£30k/year then you may be better off incorporating as a LTD company...