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shankar@oasisaccountants.co.uk
www.oasisaccountants.co.uk
ACCOUNTANTS

Expenses Guidelines for IT Contractors

24 Month Rule
You may have heard of the 24 month rule for expenses and wondered when it applies and
whether you understand it fully, in which case this handy guide could give you some insight into
the regulations surrounding the claiming of expenses.
The legislation known as the 24 month rule was designed to provide tax relief on travel expenses
for an employee, whose role requires them to move between sites in the course of their
employment. It is aimed at those who travel between their home and a temporary place of work,
as opposed to standard commuting, and provides for the expenses incurred to be paid, free of tax,
for those who meet the qualifying criteria.
For the purposes of the legislation, travel is taken to mean expenditure on all forms of travel as
well as subsistence and related costs, when these are directly related to the journey in question.
For more information, our travel expenses section covers this in more detail.
A temporary workplace is defined as one where your presence is required for a short period or to
complete a temporary assignment. Several factors will be taken into account when deciding
whether a workplace counts as temporary or not, including the length of time for which you expect
to be based at that workplace and how much time you spend there.
In general, for a workplace to be considered temporary it has to be one which you are neither at,
nor are expecting to be at, for more than 24 months.

For example:

If you are contracted for 12 months, to work at a site that you have never worked at (or near)
before, then this would be considered a temporary contract as you would not have been, nor be
expecting to work there for more than 24 months. This means that you would be able to claim
relief for travel and subsistence expenses for that workplace for the entire 12 month period.
Should you then sign another 12 month contract at the same location, on conclusion of your
original contract, then you will be expecting to stay at this place of work for at least 24 months, at
which point the site would be considered permanent rather than temporary. This would mean that
relief on travel and other related costs is no longer available to you. However, if your second
contract only had a duration of 11 months, then you would still be under the 24 month total and
therefore the site would be considered temporary and relief on travel costs would still be available.
In certain circumstances, there are additional factors which will affect whether or not the 24 month
rule will apply and the availability of relief including:
If you are based at a single site throughout your employment in a situation where you have only
had one job with the company and the business is closing, then this would not be considered a
temporary workplace. No travel expenses should be claimed in these circumstances and any that
have been should be repaid to the company.
An employee who works at a number of different sites which are effectively at the same location
will need to consider their position when it comes to the 24 month rule. If it is reasonable to
expect that all or most of your contracts will take place within the same area, then the 24 month
rules will apply to the general area rather than any specific contract or location. Although the
definition of a site or location is not clear, in cases where there is confusion, the journey itself will
Shankar Devarashetty FCCA
Oasis Accountants is a limited company registered in England and Wales No.8359050. Registered as auditors in the United Kingdom by the
Association of Chartered Certified Accountants. VAT no: 163 3407 26
be considered an indicator of the whether a location has changed or not. If your journey from
home is broadly the same, including time taken and cost, then a second contract which takes place
in a similar area will be considered to be taking place at the same location.
If you work on more than one site on a regular basis, then you will need to look at the proportion
of your time spent at each site. If the total time spent at each site is less than 40 per cent of the
total working time spent there over the 2 month period, then travel and subsistence costs are
unlimited. However, if you spend 70 per cent of your time at one site and 30 per cent at another,
then you can claim travel expenses for the site where you spend 30 per cent of your time but
nothing for the other.

24 month rule examples

Example one: Sarah has worked for her employer for five years, during which time she has
always been based at their head office in Birmingham. She is sent to Solihull to perform her duties
at a secondary office for 18 months. Odell can claim relief on travel expenses between her home
and the Solihull office as she never expected to exceed 18 months nor did she actually work for
more than 24 months at the temporary location.

Example two: After four years working for her employer, Jamie is sent to perform normal duties
at an alternative workplace for 18 months. 10 months into the new arrangement, her employer
extends the agreement for another 18 months, meaning that relief is available for the travel costs
for the first ten months (at which time the length of the contract was expected to be less than 24
months) but once the new contract has been agreed, relief is no longer available.

Example three: Cam has been employed for 7 years and is sent to perform full-time duties at an
alternative workplace for 28 months. 10 months into the agreement, the postings duration is
shortened to 18 months in total. The cost of travel from home to the workplace is not available for
relief for the first 10 months, as there was the expectation that Cam would be attending the
temporary location for more than 24 months. However, once the expectation is altered to be less
than 24 months, the new location becomes temporary and relief is available for the final 8 months
of the agreement.

Example four: Nat is an engineer who lives and works in Oldham, but Nats employer wants her
to work in Ashton-under-Lyne for 1 days a week for a period of 28 months whilst working at her
original office for the rest of the time. Nat will be able to claim relief on travel between her home
and the Aston-under-Lyne office, but not for travel to and from the Oldham office. Although Nat
expects to be working from the new location for more than 24 months, the time spent at that site
will not exceed 40 per cent of the total working time, meaning that the location is classed as
temporary.

Example five: Cary is a computer consultant specializing in banking systems and works as the
only member of a company providing these services. Cary works for a merchant bank at their
headquarters at Moorgate in the City of London for 18 months, and then starts working for a
different bank which operates from an office two doors down on a 22 month contract. There is no
relief available on Carys travel to either of these locations as the nature of her work means that it
would be reasonable for her to expect to conduct most of her work within the square mile and
therefore have a similar journey to work every day regardless of which client she works for.

Breaks in attendance

For the purposes of the 24 month regulations, a break in attendance may not be enough to qualify
for a separate period of work. This is because the rules work on the basis of a rolling window,
meaning that any break will have to satisfy the 40 per cent rule about working between different
sites. In order to class as a new place of work, there will need to be a break of at least 15 months
(60 per cent of 24 months) between incidents of working on the same site, and a stint working at
a different site in between.

Shankar Devarashetty FCCA


Oasis Accountants is a limited company registered in England and Wales No.8359050. Registered as auditors in the United
Kingdom by the Association of Chartered Certified Accountants. VAT no: 163 3407 26
Example one: Sam is employed full time on a construction project which is due to last for six
years, but each time Sam comes close to having worked there for two years, he is moved to
another site for a week. Sam returns to the main project site after each stint at the other site, but
is unable to claim relief on travel from his home to the main site as the gap between stints at the
main site is not long enough to reset the 24 month rule and Sam is spending more than 40 per
cent of his time there.

Example two: Anders works in human resources as a consultant and is taken on by a client who
wants him to design new systems in a project which lasts 17 months. He is then needed urgently
on a project in one of the clients other offices, before returning to the previous clients offices for 6
months in order to implement the new system, which was part of the initial contract. Because this
additional period was planned from the outset, Anders initially had the expectation of working at
the main client site for less than 24 months, so relief can be claimed for the first 17 month stint.
He can also claim relief for the 3 months spent at the secondary site as this constitutes a separate
site, however, he cannot claim for the final 6 month period as he now has the expectation of
working at the same site for more than 40 per cent of his time in a 24 month period.

For more information about what expenses you can claim as a contractor, please get in
touch with Your Dedicated Account Manager who will be happy to answer any of your
questions on his direct extension or on 020 3818 9530 or
email support@oasisaccountants.co.uk.

Shankar Devarashetty FCCA


Oasis Accountants is a limited company registered in England and Wales No.8359050. Registered as auditors in the United
Kingdom by the Association of Chartered Certified Accountants. VAT no: 163 3407 26