Q. Does the 24th month rule apply to a director of a limited company who is a contractor outside IR35? First contract only for 6 months, same location from home to client 5 times a week. ? What about food? I have heard so many various theories but a little unsure. Can I claim subsistence allowance instead?
A. The 24 month rules is indeed applicable to a limited company contractor operating outside of IR35.
The 24 month rule applies to claims for travel and subsistence so would include food. The rule would apply at the point that you become aware that the engagement will continue for 24 months or more, for example you receive a contract extension taking you up to or beyond 24 months. Once you become aware of the engagement lasting for more than 24 months, you may no longer be able to claim for travel and subsistence. However it is also important to consider the 40% rule, which states that if you attend the client’s site for less then 40% of your time, you may be able to continue to claim travel and subsistence expenses as the workplace would not be considered one that is permanent. For further information please refer to Booklet 490 (section 3.18) or to our 24 Month Rule Guide.
I am currently a self employed contractor (limited company) for one of the large banks, via a contracting agency. The bank has advised that all staff including contractors must take 2 weeks time off during the year for their ‘wellbeing’. For permanent staff this is a paid holiday – for contractors it is not. So we are suddenly faced with a shortfall of 10 day rates. Is this legal? Will it affect my status with HMRC if I am in effect being treated as a permanent member of staff?