advice re: 2 year rule

[shaunstrudwick]

hello there - this is my first post

i am fairly new to contracting and i am contracting through an Umbrella company

i began my current contract in Jan 2011 and this was my 1st contract position since leaving a perm job (with a different company - based in Liverpool actually)

the company i am contracting for has just extended my current contract (without a pay rise i might add - no pay rise at all since i started...) which means i will now exceed the 2 year 'temporary' workplace rule and thereby preventing me claiming back any further expenses

i am a bit confused tbh because i am now working from a different location (within London) and for a different department - albeit for the same underlying company - and i thought the 2 year rule would be reset every time i took a new position not just keep rolling in line with the original contract

surely lots of people have a contract which entails them moving depts etc within the same company - but they don't think of it as the same original contract? i don't understand the HMRC position here at all...

so i asked my umbrella company what if i was to get a different contract with a different company within London - would this then reset the 2 year rule? i was advised that it would not?!?

so what options are open to me now?

1. move my contract to a different umbrella company - would that benefit me? is that possible? would that reset the 2 year rule?

2. set up my own ltd company - would that benefit me? is that possible?
would that reset the 2 year rule

my weekly gross is only £950 so losing out on being able to claim back expenses is quite a big deal for me

any advice greatly appreciated

many thanks


shaun

[lithium147]

Welcome Shaun.

First of all, start your own limited company, you will be better off in many ways.

HMRC's view would be that, permanent employees are free to move around different departments within a company, but not free to change company. So you need to change company to differentiate yourself from permanent (or non-temporary) employment.
Your umbrella company is wrong.

On your points:

1. move my contract to a different umbrella company - would that benefit me? is that possible? would that reset the 2 year rule?

2. set up my own ltd company - would that benefit me? is that possible?
would that reset the 2 year rule

Both of these wont help with the 2 year rule.

[captainham]

Welcome to the forum Shaun.

For starters, take a look here to see how to search the forum. You'll find most questions have been asked previously, so as long as you put a bit of effort in before asking a question, you're more likely to get a better response from the old hacks on here.

http://forums.contractoruk.com/welco...uk-forums.html


I'd also suggest you take a look at the chapters 3.12 and 4.6 in the HMRC guide on this topic:

http://www.hmrc.gov.uk/helpsheets/490.pdf

You'll see that unfortunately the rule is based on a geographical location, as opposed to each client, or whether you're working through a Ltd, etc.

Try a search on the forum first though...it's been covered before about people's opinions of how far away do you have be in London from your previous gig before you can 'reset' the travel rule.

[LisaContractorUmbrella]

The 24 month rule comes down to location - you could have 2 contracts for different companies in different areas of London which extend beyond 24 months together and you would still be caught.

Changing payment vehicle won't make any difference - maybe time to look around for another gig?

[shaunstrudwick]

The 24 month rule comes down to location - you could have 2 contracts for different companies in different areas of London which extend beyond 24 months together and you would still be caught.

Changing payment vehicle won't make any difference - maybe time to look around for another gig?

so in the short term there is nothing i can do?

long term i guess i need to find a different position that pays enough not to make a difference re: claiming expenses

i will always be working in the city of London or Canary Wharf as my expertise is for a financial services based companies

[LisaContractorUmbrella]

so in the short term there is nothing i can do?

long term i guess i need to find a different position that pays enough not to make a difference re: claiming expenses

i will always be working in the city of London or Canary Wharf as my expertise is for a financial services based companies

Unfortunately yes - as you will always be caught because of the area your skills are required a rate increase would be the way forward

[captainham]

Lisa is of course quite right. If you look at the example scenarios in the HMRC link I sent you, there is one in there that specifically talks about a person who works for different clients but all within the Square Mile area of London...sounds very similar to you but take a look for yourself and see.

[northernladuk]

Welcome Shaun.

First of all, start your own limited company, you will be better off in many ways.

HMRC's view would be that, permanent employees are free to move around different departments within a company, but not free to change company. So you need to change company to differentiate yourself from permanent (or non-temporary) employment.
Your umbrella company is wrong.

On your points:

Both of these wont help with the 2 year rule.

I am tearing my hair out here. You are an utter liability... Perm employees are not free to chance company?? Seriously??

[northernladuk]

the company i am contracting for has just extended my current contract (without a pay rise i might add - no pay rise at all since i started...) which means i will now exceed the 2 year 'temporary' workplace rule and thereby preventing me claiming back any further expenses

You are a contractor now. You do not get 'pay rises'. You negotiate a hike in your rate if you can prove you have added extra value but expecting a pay rise just because you get an extension is permie mentality.

[prozak]

I am tearing my hair out here. You are an utter liability... Perm employees are not free to chance company?? Seriously??

Is that sort of response really necessary?