24 month rule

[dty]

OK where am I going wrong here?

Yes I get the bit about expected end date and count back 24 months from then. And completely forget about anything before then?

OK. Scenario 1 then above. Not even been location A 24 months so no issues.

You don't appear to get it at all :-)

It's not about being in a location for 24 months, it's about which locations you've been in for the last 24 months.

In your first scenario, over the 24 months in question (from when you expect gig 3 to end), you've spend 18 at location A. 18/24 > 40%.

Or maybe I don't get it. But I work from home...

[pmasoft]

40% of what?

You don't appear to get it at all :-)

It's not about being in a location for 24 months, it's about which locations you've been in for the last 24 months.

In your first scenario, over the 24 months in question (from when you expect gig 3 to end), you've spend 18 at location A. 18/24 > 40%.

Or maybe I don't get it. But I work from home...

I think that is a simplistic definition (no insult intended) as you also have to factor in how much of time was spent as a percentage within the 18 months as well to get an overall total. So although 40% of 24 months is 9.6 months and 18 is more, working 1 day a week on site would reduce the 18 to 80%, 2 days to 60% etc.

Also one thing nobody is mentioned is work done for the "myco" off client site (location). If you do one day a week at home that would increase the working week and that one day is 16.6% of a six day week.

Travelling time is also "not on site" work so should be used to calculate a 40% figure....8 hours plus 3 hours travelling (normal London commute for me) means your daily percentage is already down to 72%.

Sure somebody will disagree with my view, but it's a free world despite what the HMRC try and tell you

[dty]

I think that is a simplistic definition (no insult intended) as you also have to factor in how much of time was spent as a percentage within the 18 months as well to get an overall total.

True. But I think all the examples are intended to be 100% on-site.

Travelling time is also "not on site" work so should be used to calculate a 40% figure....8 hours plus 3 hours travelling (normal London commute for me) means your daily percentage is already down to 72%.

I think it's pretty universally agreed that this stuff is measured in whole days. Otherwise you'd factor in sleep time, and never spend more than 33% of your time (8 hours out of 24) at a client location. Do you bill your client for travel time?

[pmasoft]

True. But I think all the examples are intended to be 100% on-site.

I think it's pretty universally agreed that this stuff is measured in whole days. Otherwise you'd factor in sleep time, and never spend more than 33% of your time (8 hours out of 24) at a client location. Do you bill your client for travel time?

1. Although the examples may be intended to be 100%; I was just pointing out it could be more complicated.

2. Because something is "universally accepted" does not mean it is correct. Yes I do bill for travel time; it is factored into my fee as would be any necessary accommodation/subsistence costs. As for the sleeping bit; of course not. However, if I work 90 minutes away, I would charge more than for 30 minutes away. It's both common and good business sense. If I am on a daily commute, from when I walk out the front door until I return home it is all chargeable in some way or other.

[Batcher]

I'm not sure if the 24 month rule has changed over the years or maybe (more likely) I didn't understand it when I had my IR35 investigation. My perception was that as long as you had a decent break between contracts you reset the clock to start again.

I was at Client A for 18 months
I then had 3 month bench time
I was then at Client B for 5 years in the same city as Client A

I claimed travel & subsistence for the first 24 months at Client B.

HMRC argued the square mile rule, I argued that there was more than 4 miles between them so therefore not within a square mile

HMRC argued the 24 month rule, I argued that 3 months was a big enough break to reset the clock. As they eventually dropped the case I didn't have to pay anything back so assumed I won my arguments.

At no time was 40% in 24 months even mentioned in their arguments.

[psychocandy]

You don't appear to get it at all :-)

It's not about being in a location for 24 months, it's about which locations you've been in for the last 24 months.

In your first scenario, over the 24 months in question (from when you expect gig 3 to end), you've spend 18 at location A. 18/24 > 40%.

Or maybe I don't get it. But I work from home...

Nah. Because 6 months on the bench then 18 months working would mean 75% of the time at location in 24 months.

This would not trigger.

[LisaContractorUmbrella]

Have some clarity from HMRC:

3.14
The test is whether the employee has spent, or is likely to spend, 40% or
more of their working time at that particular workplace over a period of
more than 24 months. Where that is the case the workplace is a permanent
workplace so travel between there and home is ordinary commuting for
which there is no relief.

Example
Doris has worked for five years at her employer’s head office in Warrington. She is sent by
her employer to perform duties at a branch office in Wigan for 18 months.
Relief is available for the full cost of Doris’s travel between home and the temporary
workplace in Wigan.

Example
Duncan has worked for his employer for 10 years and is sent to perform full-time duties
at a workplace for 28 months. There is no relief for the cost of travel to and from the
workplace, because his attendance there is known from the outset to be for more than
24 months so the workplace is a permanent workplace. His home to work travel is
therefore ordinary commuting for which no relief is available.

Example
Dymphna has worked for her employer for three years and is sent to perform full-time
duties at a workplace for 28 months but the posting is unexpectedly ended after 18
months. No relief is available for the cost of travel between her home and the workplace,
because her attendance is expected to exceed 24 months (though in fact it does not). The
workplace is therefore a permanent workplace and the journey is ordinary commuting.


Example
Earl has worked for his employer for three years. He is sent to perform full-time duties at
a workplace for 18 months. After 10 months the posting is extended to 28 months. Relief
is available for the full cost of travel to and from the workplace during the first 10 months
(while his attendance is expected to be for less than 24 months) but not after that (once
his attendance is expected to exceed 24 months).

Example
Edina has worked for her employer for seven years and is sent to perform full-time duties
at a workplace for 28 months. After 10 months the posting is shortened to 18 months.
No relief is available for the cost of travel to and from the workplace during the first
10 months (while her attendance is expected to exceed 24 months) but relief is available
for the full cost of travel during the final eight months (once her attendance is no longer
expected to exceed 24 months).

Example
Edward lives and works in New Brighton where he is employed as an engineer. His
employer sends him to work in Wrexham for 11⁄
2 days a week for 28 months. For the rest
of the week he continues to work in New Brighton which remains a permanent workplace.
In considering whether Edward is entitled to relief for travel between home and Wrexham
it is important to look at the amount of time he expects to spend there each week and
for how long he expects to be in Wrexham. Because he expects to be in Wrexham for less
than 40% of his working time, albeit over a period longer than 24 months, and he retains a
permanent workplace in New Brighton, Wrexham is a temporary workplace for Edward and
he is entitled to relief for the cost of getting there and back.

Example
Effie is employed as a food scientist by a manufacturer of ice cream cones. She lives in
Porthmadog and works in Dolgellau. Her employer opens a new plant in Llandrindod
Wells. Effie is sent to work there four days a week and expects to be there for 30 months.
She is not entitled to relief for travel from home to Llandrindod Wells because she is
spending more than 40% of her time at the new plant and expects to be there for more
than 24 months. It is therefore a permanent workplace. Effie is not entitled to relief
for travel from home to Dolgellau for the one day a week she goes there because the
Dolgellau plant remains her permanent workplace.

Example
Ellery is employed as a financial adviser working in Brighton. His employer sends him to an
office in Bournemouth for one day a week over a 10-month period.
He travels to Bournemouth directly from his home in Hastings. Ellery is entitled to relief
for his travel to Bournemouth because he has gone there for a temporary purpose. He
does not expect to spend more than 40% of his time there nor does he expect to be going
there for more than 24 months.

Example
Eloise, a computer consultant, is the only employee of a company which she controls.
She is a specialist in banking systems.
She spends 18 months working full-time at the headquarters of a merchant bank in
Lombard Street in the City of London. She then moves next door to design a new
computer system for a different bank where she expects to stay working full-time for
22 months.
After that assignment she moves to work at a bank close by on Cheapside for 17 months.
Eloise is not entitled to tax relief for her travel from home to these workplaces, because
the nature of her work is such that she expects to work continuously in the ‘Square Mile’
albeit on the premises of different banks. So her travel from home to work will be broadly
the same every day, year in year out (see paragraph 4.6).

Example
Elwyn is employed as a speech therapist at a hospital in Devizes. His employer sends him
to Reading for three days a week to supervise a new department there.
He expects to be in Reading for 18 months. Elwyn is entitled to relief for his travel from
home to Reading. Although he is spending more than 40% of his time in Reading he does
not expect to be there for more than 24 months so Reading is a temporary workplace.

Example
Emily is employed as a seal doctor at a zoo on the south coast. She is sent to Morecambe
to supervise a seal sanctuary for one day each month. She has done this for five years.
Although Emily goes to Morecambe for more than 24 months she does not spend more
than 40% of her working time there and she retains a permanent workplace on the south
coast. So she is entitled to relief for her travel from home to Morecambe.

Example
Emmett lives in Knaresborough and has a part-time job working two days a week in
Harrogate as a telephonist for an insurance company. He is asked to spend one of his two
working days covering for a colleague at a branch in Ripon for a period of 32 months.
Emmett is not entitled to relief for travel between home and Ripon because, while he
spends only one day a week in Ripon, this is more than 40% of his working time and he
expects to be there for more than 24 months. Emmett is not entitled to relief for the
journey he makes between home and Harrogate on the other day he works because
Harrogate remains a permanent workplace.

3.15
Usually it will be clear whether or not an employee expects to spend more
than 40% of their working time at a particular workplace over a period
of more than 24 months. Where there is some uncertainty, cases should be
decided on their facts. An obvious starting point is what the employer has
told the employee. Another point to consider may be whether the employee
has moved home as a result of the change in workplace. An employee may be
less likely to relocate for a posting that is expected to last under 24 months
than for one that is expected to last longer. That is not to say, if someone
does move home as a result of a change of workplace, it necessarily means
they expect the new workplace to be permanent, or that if they do not move
home they necessarily expect the new workplace to be temporary. Moving
home is not a test, it is only one factor to be taken into consideration – but it
is an important one.

[Batcher]

I think Effie is getting a raw deal. Two permanent workplaces so can't claim despite only spending 1 day a week at one of them.

[dty]

Nah. Because 6 months on the bench then 18 months working would mean 75% of the time at location in 24 months.

This would not trigger.

The scenario I was working from said gig 2 was 6 months at location B. It didn't say anything about being on the bench.

[pmasoft]

I think Effie is getting a raw deal. Two permanent workplaces so can't claim despite only spending 1 day a week at one of them.

So does Eloise (only "MyCo" one in examples that I can see) States she cannot claim expenses for first 22 month contract "because she can reasonably expect" to always work in London. Absolute b*ll*cks. She will have no idea if, or where, she will be working after this contract. There are merchant banks all over the world. Alternatively she may go work for a client elsewhere within UK who may or may not be a merchant bank.

All HMRC examples should be taken with a pinch of salt as they are written from their perspective and are always biased.