Travel between offices and worksites is a normal cost of conducting business for some workers.
The cost and inconvenience of leaving your usual surroundings can quickly add up.
HMRC offers tax relief on travel expenses to non-permanent places of work which sit under the 24th month rule.
Which types of travel does this rule not include?
Standard commuting between home and your normal place of work or your own company premises.
Not much to take from that and so it may be easier to explain what the rules include.
The 24 month rule and its specific conditions:
“Temporary place of work”
You are allowed to claim travel expenses for trips between your home and your clients premises or “temporary workplace”. This is seen as requiring special travel and can lead to undue costs.
HMRC guidelines have been set to assist in deciding whether a site is temporary or not.
What are the conditions?
- The employee must have spent or be likely to spend more than 40% of their working time at a workplace.
- They must attend it or be likely to attend it over a period lasting more than 24th months.
The 24th month rule has two key conditions. For the rule to apply and for a business to NOT be able to claim this travel expense – both of these must be met.
Important considerations:
- The contract will become longer than 24 months. As soon as you know the contract will last longer than 24 months, you must stop claiming expenses. Therefore if you know from day one that the contract will be two years, you will never be able to claim.
- 24 months is the TOTAL calendar period, not the actual amount of time spent working with a client. This is the case even if you sign a new contract during the period.
- A 15 month break (60% of any two-year period) would be enough to ensure that the 24 month rule does not apply.
- If contract length is unclear you can claim tax relief if its assumed that the agreement won’t last 24 months or more.
Tax relief is not available for private travel which is any place an employee doesn’t need to be for work purposes.
Learn more on the HMRC Employment Income Manual.
If you need help with this, or with other advice, then please get in touch with our accounting team.