The 24 Month Rule

What is the 24 month rule?

A piece of legislation came into effect in 1998, which determined that expenses could be claimed from your place of home to a ‘temporary workplace’. Prior to this, no deduction could be claimed for travel costs.

What is a qualifying ‘temporary workplace’ and can I claim for travel?

When assessing the legislation, HMRC take a forward view, however, will review previous travel patterns along with any future expected movements on your contract.

Below is a list of scenarios, along with the inter relationship with the 24 month rule and the time in which travel related expenditure can be claimed to and from, if applicable:

  • If you are engaged on a contract for under 24 months and it is expected for this time frame not to be surpassed.
    • 24 month rule is not broken and travel expenses can be claimed from the start of the assignment.

 

  • If you are engaged on a contract for under 24 months, however it becomes expected that 24 months will be exceeded, most commonly but not limited to an extension.
    • Travel expenses can be claimed up until the date in which it becomes expected to last more than 24 months, after this point the 24 month rule is broken.

 

  • If you are engaged on a contract greater than 24 months, however, it becomes expected that the contract will be under 24 months, e.g. assignment shortened.
    • Travel expenses can be claimed from the date of the change, however, expenses can’t be claimed up until the date of change as the 24 month rule would be broken.

 

  • Should you return to a workplace that you have spent over 40% or more of your time in the last 24 months.
    • This would fall foul of the 40% and 24 month rule, therefore no travel expenses can be claimed.

 

  • Should you return to a workplace that you have spent less than 40% of your time in the last 24 months.
    • Travel expenses can be claimed up until the point in which the 40% rule is broken. Naturally this would need to be monitored and anticipated so that travel expenses are not incorrectly claimed.

Naturally, this can be a rather ambiguous area of tax law, so please do not hesitate to get in touch with your accountant at djca for further clarification on travel costs in relation to your current assignment.