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Blog: What’s the 24-month rule when claiming travel and subsistence?

August 21, 2014

One of our Umbrella Payroll clients had a contractor tax query that brought into play the 24-month rule when claiming travel & subsistence. See the full Q&A below…

Q: If I finish at LBG in Halifax on 26th September – when is the earliest I can return without Tax implications is it 2 months or 3 months? 

A: If you’ve worked up to 24 months at one location (for HMRC purposes, it’s not the company at which you work, but the geographical area that counts, which is any place within 1 square mile), or at the point you expect to work up to 24 months at one location (say, if you had an 18 month contract which then got extended for another 12 months), then you are not able to claim any expenses from that point onwards.

Once you’ve worked 24 months at one location, then if you left and worked somewhere else, you would need to have worked at the first location for no more than 40% of your time, since first starting there, to be able to claim expenses.  So, once you’ve worked in one location for 24 months, you would need to work somewhere over 1 mile away for 60 months to make the first location less than 40% of your working time (24/60 = 0.4).

So in short, it would take a long time of working elsewhere to bring back the first location to under 40% of your working time.  That’s not to say you wouldn’t be able to claim expenses at the second workplace, but you’re not able to claim expenses at the first workplace, once you’ve been there, or once you expect to be there, for over 24 months, unless you spend 40% or less of your working time there.

If you’d like further information or advice on the 24 month rule when claiming travel and subsistence in your contractor role, contact one of our experts on 0203 713 4530 or email contact@carringtonumbrella.co.uk

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