Seasons Greetings

see our Festive opening times

Contractors and commuting: The 24 month rule

Contractors and commuting: The 24 month rule

At Larsen Howie, we often talk about the benefits working as a contractor has over regular work. It’s to be expected, given what we specialise in.

But contractors, regular workers, almost everyone currently working in the UK has something in common – they have to get to work.

Some commutes are probably quite idyllic. Others can be a living hell. It’s unlikely to be many peoples favourite part of the day – particularly on days with traffic jams or transport delays.

Add onto this stress the cost of petrol and public transport tickets, and it all makes for something rather unpleasant.

However, if you work as a contractor, you may be able to save money on the cost of travel to and from work. And that might just cheer you up a bit when the daily grind is really getting to you!

Contractors should be aware that when starting a new contract, they should find out whether their new employer satisfies the Temporary Workplace Rule.

Now a particularly important element of the Temporary Workplace is regulation EIM32080. In case you don’t have the government’s employment income manual memorised, that’s better known as the 24 month rule.

What this essentially means is, that since 1998, if a contractor signs a contract of less than 24 months, and the engagement period is unclear (but assumed to be less than 24 months), their workplace is given ‘temporary’ status.

This means that a contractor who does not intend to work for more than 24 months at a specific location may be able to claim expenses such as travel and subsistence.

One thing to clarify is that if you sign say an initial 18 month contract, you can claim expenses throughout this period. However, if you then sign a one year extension to that initial 18 month contract, at that point you will know your engagement at the company will exceed 24 months, and you can no longer claim. Unfortunately, you are not able to claim up to the passing of the 24 month period, as your workplace will shift from ‘temporary’ to ‘permanent’ status.

As with all UK tax legislation there are questions surrounding it.  For example, what if the location of the end client changes, or what if I have a break and then return to the same end client? Seeking qualified advice is always best to ascertain the answers to such questions, never assume.

Ultimately, it’s worth looking into this, as any money saved can only be to your own benefit as a worker.

Take a thorough look through the Government’s Employment Income Manual before approaching your employer or future employer about such possible expense claims: https://www.gov.uk/hmrc-internal-manuals/employment-income-manual

But there could be a good chunk of cash saved that, as a contractor in certain circumstances, you might well be entitled to. Don’t miss out on what’s yours!