HMRC are very strict on the definition of what is deemed as a temporary workplace when it comes to claiming business expenses. Your work place must be somewhere you attend for the purpose of performing a task for a limited period of time, which does not exceed 24 months. If you enter into a contract for more than 24 months from the outset, under HMRC legislation you are not allowed to claim travel and subsistence expenses for working on that site.
HMRC’s legislation clearly states that the 24 month rule applies to the location where you are working. The 24 month rule count starts when you commence your contract not when you join an Umbrella Payroll Company. Switching umbrella companies does not mean the clock starts ticking again.
If you agree to perform full-time duties at a temporary workplace for say 12 months and after 11 months your contract is extended to 26 months, you are allowed to claim all expenses for the first 11months but no expenses can be claimed after that. The reason for this is that the 24 month rule has been exceeded and your workplace is now deemed to be permanent!
There is one exception to the above rule and that is HMRC will deem a workplace to be a temporary workplace if you only spend less that 40% of your time carrying out your contract at the same location for more than 24 months. If this is the case then you are permitted to claim expenses.
At the point that you resign, or advise your Umbrella Company that you will be leaving at the end of your current assignment then your temporary work place will be deemed to be a permanent workplace, from the point of the decision or disclosure, then no further travel and subsistence claims can be put through.
The expenses are disallowable at the point that the Umbrella Company becomes aware that the contractor has no further intention to carry out multiple assignments across a series of temporary workplaces.
Simplyco are expert contractor accountants and work to keep their contractors in the loop about the ways legislation can affect them. To find out more about how we can support you, please give us a call on 01900 898 440 or email firstname.lastname@example.org.
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