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The 24 Month Rule – Travel Expenses

Q. I started an IT project management contract with my client 2.5 years ago. The role is based in the client’s office close to my home and agreed that occasional travel to the client’s other offices would be required, for which they would reimburse my expenses. In reality, I have typically spent three days a week in the satellite offices and recently, five days a week. The client has continued to reimburse expenses but are there any implications of the two year rule on how I should account for expenses through my Ltd company?

A.The 24-month rule states that once a worker knows that they are going to remain with the same end client for more than 24 months, at the point that it becomes known, travel and subsistence expenses can no longer be claimed, as the workplace is no longer temporary after 24 months. The costs of travel to and from other workplaces may still be able to be claimed but this should be for exceptional travel outside of the usual location. The client can continue to reimburse such expenses if they so wish, but once the 24-month rules is applicable, such expenses can no longer be claimed via your limited company. If the client does continue to pay expenses it would be better if costs for such could be built into your rate for the services.

You state that you were aware that you would spend 3 days at the ‘satellite’ offices which is likely to have meant that the majority of your time was spent at that location and therefore that this is the usual location, although it does depend when you started working at this location and when this became your main place of work. You may therefore no longer be able to claim expenses for travel to and from the ‘satellite’ offices as this is not exceptional travel. However it is also necessary to consider the 40% rule –  for the 24-month rule to apply, both legs of the test must be met; for a workplace to be deemed permanent, the employee must have spent or be likely to spend more than 40% of their working time at a workplace and they must attend it or be likely to attend it over a period lasting more than 24 months. (Booklet 490 Employee Travel 3.22).

This answer was provided by Qdos Contractor.

By Contractor Doctor

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