The 24 Month Rule

In order for an umbrella company to allow travel and subsistence expenses, they must ensure there is and over-arching contract in place. This will link together a series of separate assignments under a continuous employment. Then they must also ascertain that the employee has an entitlement to claim the expense. If the intention is only to work on a single assignment then it will be considered a permanent workplace. At this point there is no entitlement. However, working for a period of time may mean that The 24 Month Rule may apply.

There is also no entitlement if the employee works at the same location for a period of 24 months or more. This also applies if the employee knows they will be working there for a period of 24 months or more. So, if the employee is working on a 12 month assignment which is then extended for a further 18 months, the 24 month rule will apply. This applies as soon as the extension is agreed. At that point, it is confirmed that the time spent at that workplace will exceed 24 months.

A Temporary Workplace

HMRC guidance states that a workplace is prevented from being temporary where an employee attends it in the course of a period of continuous work that lasts, or is likely to last, more than 24 months. The ‘period of continuous work’ is defined as a period over which the duties of the employment are performed to a significant extent at that place and a ‘significant extent’ is defined as being more that 40% of the employee’s working time.

As an example… Consider a contractor who works on a 6 month contract in central London. He then takes another contract for 6 months in Birmingham; a subsequent 18 month contract in central London would then bring the 24 month rule into effect. His total working time is 30 months and 24 months would have been spent working in central London i.e. 80%.

Change of Location for Temporary Work

A further consideration has to be given to what constitutes a change of location. HMRC guidance states a change of workplace with ‘no substantial effect on the employee’s journey to work’ will not re-set the 24 month rule. They do not define a ‘substantial effect’. They simply say a change of location must have an effect on the journey or the cost of that journey. Therefore, it is generally accepted that a move within a city centre will not re-set the 24 month clock.