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24 Month Rule

There are strict guidelines and regulations relating to the right to claim legitimate business expenses whilst working as a temporary contractor. Specific legislation is in place to put a stop to the abuse of claiming expenses when HM Revenue & Customs consider your temporary contract is no longer temporary.

Often referred to as the “Temporary Workplace Rule” the “24 Month Rule” is a piece of legislation, which governs how long you can work at any one temporary place of employment and continue to claim expenses there.

This ruling controls the claiming of expenses including mileage, travel and subsistence. The rule states that the cost of travel from your home, (which is deemed to be your permanent place of work as recorded in your employment contract), to your contracted site address, (your temporary workplace), is only allowable as a tax deductible expense for as long as you believe your contract will not exceed 24 months.

If you enter into a contract with a term of less than 24 months you are allowed to claim business expenses as detailed in the expense policy for the entire term of the contract.

In simple terms, if you enter into a contract with a term of 24 months or more, which is based at one geographical location, you would not be allowed to claim any expenses as this would fall within the “24 Month Rule” and HMRC would consider this to be your permanent place of employment.

What’s more, if you enter into a contract for say 18 months and nearing the end of the initial period your client requests that it be extended for another 6 months, at the same site address, the 24 month rule will still apply. The key point you should be aware of in this situation is that you would not be allowed to claim expenses from that point on, rather than on the 24 month anniversary of the contract.

The 24 month rule has some sister legislation

In situations where you exceed the 24 month rule, additional legislation kicks in, which tests, in more detail, what expenses (if any), would be claimable. Therefore, as far as further work is concerned, you would be subject to the “40% rule”. This is a test applied by HMRC to determine whether you have spent or are likely to spend, 40% or more of your total working time at your current employer’s workplace.

The various regulations surrounding this important rule have a tendency to be somewhat complex and we suggest you contact us directly to discuss your individual circumstances in detail.

To find out more

Simply give our experienced New Business Team a call today on 0800 848 8888, chat to us online or feel free to submit your query using our quick online form

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