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2 yr rule - am I losing out?

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    2 yr rule - am I losing out?

    I am trying to work out the effect that the 2 yr rule will have on me. My basic understanding is that I can no longer claim ‘everyday travel’ expenses from my office (home) to my place of work (site). I know many people on here say to up your rate to cover the travel costs, but if I pay myself more then I use up more of my personal allowance don’t I?

    For example
    Personal allowance is £38k for the year.
    Take £2500 a month “salary” = £30k for the year
    Draw £300 travel expenses a month = £3600
    Take “top up divi’s” of £8k
    Total in my pocket = £41,600

    Now with the 2 ur rule
    Take £2500 a month “salary” = £30k for the year (and have to spent £300 a month on travel)
    Draw no travel expenses a month = £0
    Take “top up divi’s” of £8k
    Total in my pocket = £38k

    #2
    Errr yes. You lose out by having to pay tax on what was expenses.
    Will work inside IR35. Or for food.

    Comment


      #3
      If you've been there for more than 2 years at the same site, HMRC considers you can't really claim you're travelling to a 'temporary workplace' which is what those expenses are supposed to be for. After 2 years it becomes your permanent workplace.

      So the choice is to pay up, ask for more money, or move jobs.
      Cooking doesn't get tougher than this.

      Comment


        #4
        Originally posted by youngguy View Post
        I... I know many people on here say to up your rate ... but if I pay myself more then I use up more of my personal allowance ...
        "Up your rate" means charge the client (agency) more to cover the reduction. It doesn't mean "pay yourself more".
        Down with racism. Long live miscegenation!

        Comment


          #5
          I don't think I could stay on one contract for more than 2 years anyway. My limit is usually 12 months and by then I ready to move on

          Surly that's what contractings about

          Comment


            #6
            Originally posted by badger7579 View Post
            I don't think I could stay on one contract for more than 2 years anyway. My limit is usually 12 months and by then I ready to move on

            Surly that's what contractings about
            And there I thought contracting was about bringing expertise to the company. The IR35 issue only holds back people's desire to stay longer than 2 years.
            If your company is the best place to work in, for a mere £500 p/d, you can advertise here.

            Comment


              #7
              More than 1 client?

              Hi,

              Sorry for hijacking this thread but this is an issue i have been thinking about recently myself but from a different angle / set of circumstances.

              I understand the '2 Year Rule' as it applies if you have a single client / place of work but i currently have 3 clients and so have 3 different places of work, 4 if you count my own office (which i do use as a place of work and not simply a 'base') and so i dont neccessarily travel to the same place of work each day, for example before this week is finished i will have travelled to / visited all 3 clients. In the past i have had reason to visit all 3 in the same day.

              Anybody any idea how that plays with the 2 year rule?

              Alan

              Comment


                #8
                Originally posted by AlanR View Post
                Anybody any idea how that plays with the 2 year rule?
                2 year rule applies to a site you spend more than 40% of your time at. So if you are spreading your time equally about your three clients and your base, then the rule won't apply to you.

                If you spend more than 40% at one of them, then you won't be able to claim the expenses associated with THAT client after 2 years.

                Bear in mind also, that if your three clients are lumped together, and your journey is mostly the same for each one, then they count as a single site.
                Cooking doesn't get tougher than this.

                Comment


                  #9
                  So are you saying you work for Coy A in Kings Cross for 1 year, Coy B in Waterloo for another 6 months and then take a contract with Coy C in Canary Wharf it is classed as same site i.e. London, if you commuted from Reading for example?

                  Comment


                    #10
                    Originally posted by Manic View Post
                    So are you saying you work for Coy A in Kings Cross for 1 year, Coy B in Waterloo for another 6 months and then take a contract with Coy C in Canary Wharf it is classed as same site i.e. London, if you commuted from Reading for example?
                    Roughly - I'm not sure I've seen a legal precedent, but you won't as it's the HMRC who decide.

                    It's arguable either way. To get to any of those sites from Reading you'd need a travelcard, so your expenditure isn't changing.
                    ‎"See, you think I give a tulip. Wrong. In fact, while you talk, I'm thinking; How can I give less of a tulip? That's why I look interested."

                    Comment

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