24 Month Rule

Prior to this new legislation being introduced in 1998, travel had to be in the performance of the duties. Travel to and from work was not allowable.

The new rules introduced in 1998 permitted travel from home to qualifying workplaces subject to a time limit on the period of attendance. The draft legislation suggested a time limit of 12 months but the final legislation set the limit at 24 months.

The following assumes that the workplace passes the basic "temporary workplace" test – in other words that it is a qualifying workplace.

As the legislation is forward looking, each journey is looked at based on the facts as known at the time the journey is made bearing in mind previous patterns, future expectations and/or reasonable assumptions:

- If a person is engaged on a contract that will last less, or is expected to last less, or it is reasonable to assume that it will last less than 24 months, the 24 month rule is not broken.

- If the length of the contract is uncertain then the claim should qualify until 24 months is reached when, as from that date, the claim will fail.

- If the length of the contract is expected to be less than 24 months and then something changes and the contract is then expected to last more than 24 months then the claim fails as from the date of the change.

- If the length of the contract is expected to be more than 24 months and then something changes and the contract is then expected to last less than 24 months then the claim is allowable as from the date of the change.

- Where a person moves from workplace to workplace, and doesn't return to a workplace previously attended, the 24 month rule is reasonably straightforward but those writing the legislation had to take into account employees who return to or keep returning to the same workplace. This happens frequently in the engineering construction industry and is where the "40% rule" comes into play.

40% rule

Where a person returns to a previously attended workplace on 1 November 2008 - count back 24 months – did that person spend 40% of their time at that workplace in that period?

If the answer is yes then no allowance is due for the journey made on 1 November 2008. The problem is that as more time is spent at a workplace the % changes. This is best explained by an example. A person is at a workplace for the full 12 months ended 31 October 2007 and returns on 1 November 2008 – over the previous 24 months 50% of the working time has been spent at the workplace – the claim, as from 1 November 2008, fails.

Compare that with a person who spends 6 months ended 31 October 2007 and returns on the 1 November 2008. Over the previous 24 months 25% of the working time has been at the workplace so a claim will succeed but as time goes on the % will change. If that person is still at the workplace on 1 November 2009 then over the previous 24 months 50% of the working time will have been spent there and the claim will fail – somewhere between the two dates the % hits 40% and it is at that point that the claim will fail.


The legislation was ".. purposely written to be forward looking…". Unfortunately many members of HMRC do not seem to have got that message and simply look at the situation with the benefit of hindsight.

This is an actual case - I have been involved in an enquiry that has lasted over 2 years - a professional footballer whose club started to use a training venue for the first time in August 2005. The future of the venue was in doubt – it would either be developed into something else and then become unavailable for the club or closed down completely.

The fact is that attendance at that training venue had a limited lifespan – but how long? No one knew.

The club booked the training venue on a monthly basis. A claim was submitted for 2005/2006 in the summer of 2006. An enquiry was opened and I was asked to assist. It was still going on 2 years later - 2008. As it happens the club is still using the training venue – 3 years after first attendance. The enquiry was closed on the basis that the training venue was a permanent workplace and included in the closure notice was the statement "…history has shown that….".

I then did three things – I appealed against the closure notice, asked for the appeal to be heard by the Special Commissioners and requested a review by the HMRC Appeals Unit. The case was dropped. I quote from the letter from the Appeals Unit ".. as it was uncertain at the time…". The legislation cannot be applied retrospectively – to quote from another letter from HMRC (not the local tax office this was Head Office HMRC) – the legislation was "…purposely written to be forward looking…" and as a consequence cannot be applied retrospectively.

Bob, the retired tax inspector.

Editor's Note: You may also be interested in ContractorUK's Contractor Expenses section.

Further reading on the 24-month rule -

Contractors' Questions: Can I beat the 24-month rule?

Contractors' Questions: Can I claim if a short gig ends up lasting 25 months?

Contractors' Questions: What about expenses if I extend?

Contractors' Questions: Can I claim travel, office and hotel expenses?

Contractors' Questions: Would commuting cost me less as a 'Ltd'?


Friday 18th Jan 2008