24 Month Rule Explained

Do you know how the 24 month rule applies to you? Contractors & Freelancers

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This is a rule that contractors often forget about, however it is a very important one.

In a nutshell, if you work at the same location for more than 24 months you are no longer able to claim for travel expenses to and from work each day.

You are no longer able to claim this expense as your workplace is no longer considered temporary. After 24 months, the location is considered permanent, unless you spend less than 40% of your time at that location.

You must remember that this rule applies from the date that you are aware you will be working at the same site for more than 24 months. Therefore you should stop claiming for any travel expenses to and from your place of work each day from the date you sign a contract that takes you over the 24 months.

It is also important to know that this applies to the location that you are working and not a particular client. There must be a significant change to your daily commute to allow the 24 month-rule clock to reset.

Please note that this rule is completely separate to the IR35 legislation. Travel expenses can be claimed whether you operate inside or outside the IR35 legislation so long as the workplace is considered ‘temporary’.

If you are at all unsure if this applies to you please contact your accountant and they will be happy to advise further.

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