24 month rule when moving from umbrealla to ltd

[contractor59]

I have been contracting in the City of London for the last 20 months via an umbrella company. I have just set up a Ltd company and have taken another 6 month contract also in City of London (so same location in the view of HMRC).

Does the 24 month rule span across by periods at the umbrella and Ltd company (in which case I can no longer claim as I have the expectation I will be in the same location for over 24 months), or do the 24 months effectively start again from the time I moved to the Ltd company?

Thanks in advance for your response

[Clare@InTouch]

The rule goes on location not employer, so the switch won't make any difference - you should not claim travel or subsistence.

[Nixon Williams]

I have been contracting in the City of London for the last 20 months via an umbrella company. I have just set up a Ltd company and have taken another 6 month contract also in City of London (so same location in the view of HMRC).

Does the 24 month rule span across by periods at the umbrella and Ltd company (in which case I can no longer claim as I have the expectation I will be in the same location for over 24 months), or do the 24 months effectively start again from the time I moved to the Ltd company?

Thanks in advance for your response

Not only would you not be able to claim through your new limited company, but your claim appears to fail through the umbrella as well. If I read it right, you spent the whole of your 20 months at one site whilst with the umbrella, therefore your "employment" via the umbrella was not temporary but permanent.

Users of umbrellas' often forget this part of the rule, if you were at one site throughout your time with XYZ umbrella and then moved to ABC umbrella, any claim under the "24 month rules" would fail.

[Steven@Parasol]

Not only would you not be able to claim through your new limited company, but your claim appears to fail through the umbrella as well. If I read it right, you spent the whole of your 20 months at one site whilst with the umbrella, therefore your "employment" via the umbrella was not temporary but permanent.

Users of umbrellas' often forget this part of the rule, if you were at one site throughout your time with XYZ umbrella and then moved to ABC umbrella, any claim under the "24 month rules" would fail.

We would view this differently and would allow expenses to be claimed for a 20 month contract. It is only as soon as it it know that the contract period will be over 24 months (either as a 24 month contract or as 4 six month contracts as an example) would this be flagged up and the ability to claim travel and subsitence expenses removed.

[RichardCranium]

We would view this differently

Check your own rules. No you don't, if your client is only going to have one contract through you, which is what Nixon Williams was on about.

[LisaContractorUmbrella]

NW is right;the rule is just a little more subtle than that. Travel expenses cannot be claimed if the intention of the umbrella company's employee is only to complete one contract under their employment e.g. if someone takes a contract in between 2 permanent jobs

[Steven@Parasol]

Sorry I didn't phrase my comment very well at all.

If a contractor registered with us for say a month’s contract for the first time, then we would block their expenses. However, if they then got another contract for 20 months straight after this, we would allow their expenses as it does not breach the 2 year rule.

It’s not clear from what the OP has said as to wether or not they have only had 1 contract through the same umbrella.

I suppose we would need all the post codes and contract details to say absolutely 100% what the scenario is.

I should have been more detailed and explain I was referring to an ongoing contractor who had had a previous short term contract etc.

Apologies all.

[LisaContractorUmbrella]

Having re-read the OP his second contract (first through Ltd) takes him to 26 months at the same (similar) location in the City of London and therefore the 24 month rule would apply

[Wanderer]

NW is right;the rule is just a little more subtle than that. Travel expenses cannot be claimed if the intention of the umbrella company's employee is only to complete one contract under their employment e.g. if someone takes a contract in between 2 permanent jobs

And how on earth would they ever prove what the intention was (other than the worker stating their intention in an interview)? Two years is a long time. Another nonsense tax rule from our friends at HMRC.

[contractor59]

Many thanks for your responses. I had multiple contracts with the Umbrella all in the City of London so I think I was ok to claim expenses over that time.

One other question which I'm sure has been asked before by anyone working in the financial sector: are the 2 main financial centres in London - Square Mile and Docklands- considered to be separate locations. From my perspective difference in journey time would be approx 25mins each way and difference in train fares approx £900 per year