The concept of the 24-month rule has been a little tricky to be understood by everybody in the circle of contracts. The rule allows one to claim expenses for their travel from their home to the client’s workplace as long as it falls under the category of a ‘temporary workplace.’ It has been in effect since 1998.
Two factors that must be kept in mind to qualify for the rule are:
1. The engagement lasts for less than 24 months.
2. The engagement period is uncertain but in generic sense assumed to be less than a period of 24 months.
The contract commences from the first time the party begins to travel to the client’s work spot and goes on until the last one regardless of breaks being taken in the middle of the 24 month period. Given that the work period is, or assumed to be less than 24 months then the travel expenses can be claimed. Nevertheless, if during the period it becomes obvious that the engagement will exceed the 24-months mark, then travel expenses can no longer be claimed.
This is pertinent if a shorter contract, say twelve months is further extended to all-inclusive 24 months or an extension of sixteen months for instance. At this point of extending the period is considered to be more than the 24 months’ time frame and hence the expenses cannot be claimed.
Here are a few common queries with answers.
Given a situation where the place of work has been changed though the client remains the same. What can be done?
The answer is a little uncertain as it depends on several factors. The change in the location must be of a significant distant, affecting the contractor’s plan evidently. One must keep in mind the change in the travel expenses if it is a significant change in the amount of money spent or not. Also, keep in mind if it has affected the overall journey.
Let’s say if you drive to work and the changed location is about 25 miles ahead in the opposite direction, there is no debate required to prove that the expenses have increased and the journey is evidently different. Hence this is a new workplace and the 24-month period starts all over again. However, if you take the tube or any other public transport and your client’s work spot changes but within the same zone, the cost would remain the same and as very little has changed, this wouldn’t be considered a new client site.
How long of a break can one take before the work starts?
Taking a small break to restart the 24-months rule may sound like a possible plan but isn’t as simple as it appears. The 24-month period starts from the first travel to the client’s workplace and if the contractor has spent over 40% of their time and planned efforts on it within the respective time period, then the expenses cannot be claimed even if there were breaks in the time period.
Will this have an impact on one’s IR35 status?
This is an entirely different legislation and hence will have absolutely no impact on one’s IR35 status.