The 24 month rule often causes a lot of confusion amongst contractors.
For most people, travelling from home to work is not a deductible expense. However, in 1998 HMRC introduced legislation allowing travel expenses to a temporary workplace. So, where a contract is less than 24 months, all travel costs are allowable.
So what about contracts that don’t have a definitive length? HMRC allow travel costs until it is reasonable to assume that the contract will last more than 24 months.
Where a contract lasts for longer than 24 months, the workplace is classed as permanent. This means that travel costs are not allowable.
Things get more complicated when a person moves from workplace to workplace but then returns to a previous place of work.
If you return to a previous workplace you must apply the 40% rule to determine if it qualifies as a permanent place of work. To do this you must count back 24 months from the start of your contract. If you spent more than 40% of the last 24 months at that workplace, it can be classed as a permanent place of work. This means travel costs are not allowable.
Unfortunately, the 24 month rule does not account for you returning to a previous site but contracting for a different company. The only thing considered is whether or not your journey to work is significantly different.
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