24 Month Rule
Travel from your home or place of residence to qualifying workplaces is an allowable expenses subject to the location being deemed a temporary workplace.
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.
Where a person returns to a previously attended workplace on 1 November 2018- 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 2018. 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 2017 and returns on 1 November 2018 – over the previous 24 months 50% of the working time has been spent at the workplace – the claim, as from 1 November 2018, fails.
Compare that with a person who spends 6 months ended 31 October 2017 and returns on the 1 November 2018. 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 2019 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.
Editor's Note: You may also be interested in ContractorUK's Contractor Expenses section.
Further reading on the 24-month rule -