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24-month rule...

What is the 24-month rule for travelling expenses and how do you “reset the clock”?

As soon as a contractor expects to be at a location for more than 2 years, then the workplace is no longer considered temporary and expenses associated with getting to and from there can no longer be claimed.

For example, if a contractor starts a 12-month contract in Edinburgh and his last contract was in, say, Glasgow, then the contractor can claim travel expenses for the duration of this contract. If, at the end of this contract, he is given a six month extension, he can continue to claim travel expenses throughout the extension period as the time at this location will only be 18 months. If after 18-months, he receives a further 7 month extension, this will take his/her time at this location beyond 24 months. The location ceases to be a temporary workplace when the contractor is aware that the time at the location will exceed 24 months. Crucially, the travel expenses must stop being claimed when the extension is awarded (ie, month 18), rather than when the 24 month period is actually exceeded.

Resetting the clock with a change in location

The only way to reset the 24-month clock is to make a significant change to the location and/or the journey. Changing clients makes no difference. Changing agencies makes no difference. Moving from permanent to contractor makes no difference. There must be a significant change in the overall journey to re-set the clock. The key word here is significant and it is more often than not more helpful to look at the journey than the location. So, moving from a contract in one street in Glasgow to another in Glasgow will not significantly affect the journey so even if the client has changed, and the agency, and the location, the travel expenses can no longer be claimed.

Resetting the clock by taking a break from the location

There is no defined length of time you must be away from a location before you can return and start claiming expenses again. So, provided you are satisfied that there has been a significant location change, then one must revert back the application of the 40% rule over the last 2 years. So, when you return to location 1, count back 24 months from that date and if, in total, you have spent less than 40% of your working time there, then you can start to claim travel expenses again. Practically, this means that you need to have been working elsewhere for 14.4 months in the last two years before the expenses can be claimed again.

This should be reviewed periodically, we would suggest monthly or even weekly, because for each week that passes in the second spell at the first location, the percentage of time at the second location decreases.

So, in conclusion, if you cannot satisfy yourself that the location is temporary under either the 40% rule or the 24-month rule, then you must not claim travel expenses.

NOTE: The 24-month rule applies to ALL travel and accommodation: this includes mileage, flights, train travel, taxis, hotels, privately rented house, meals, subsistence etc