You might have heard of the ’24-month rule’ that relates to tax claims for working at temporary workplaces – but it can be a complex area that comes with lots of conditions and requirements. If you or your staff are working away from the location you’re permanently based then this guide will be useful when it comes to working within HMRC regulations. Not only will we define the term – but we’ll give you some examples of how it works in real life…
Please note – this is intended as guidance only, to give you some outline information prior to discussing possibilities with your accountant. Tax-relief relating to temporary workplaces can save a lot of money – but it’s important you always seek qualified professional guidance.
What is the 24-month rule?
The legislation was created to provide tax relief on travel expenses for an employee who was required to move between sites for their employment. Instead of being for people who simply commute to work – the 24-month rule was designed for people who are frequently travelling to one or more temporary places of work. If you meet the criteria, expenses that are incurred can be paid without incurring tax.
What’s considered ‘travel’?
Although the term travel often relates just to the actual means of travel – i.e. plane, train, car mileage, etc – ‘travel’ in this instance relates to any costs that relate to working somewhere other than your permanent place of employment. So, that could include:
- Childcare costs
- Clothing specific to the temporary location
- Home office costs
- Training costs
- Travel costs – including public transport, mileage and taxi costs
What’s considered a ‘temporary workplace’?
The HMRC defines this as being a workplace in which your presence is required for a short period or to complete a temporary assignment. It’s not just the length of time that is spent there that defines somewhere as temporary – it could actually be the proportion of time you spend there compared with your permanent workplace – although generally speaking, you would be expected to be at any temporary place of work for less than 24-months.
Some real-life examples
If every temporary workplace secondment were as simple as sending someone to another site for a certain period of time – then the 24-month rule would be easily applied, however, it’s rare that this cut-and-dry way of working is the case. Therefore, we’ll share some examples that show how the rule works in slightly more complex business practice:
- Time working away reduced
Mark is based in Glasgow but agreed to working in his company’s Edinburgh office for a 3-year period – meaning he is not eligible for temporary workplace tax relief. However, after 6 months, Mark’s company shortens this secondment to 18 months. Although 18 months falls within what is acceptable as a temporary workplace, until 6-month in, it was intended that he was there for 3-years, so expenses incurred during his first 6 months are not eligible for tax-relief. However, his remaining 12 months are now at a temporary workplace – so his travel expenses are now tax-free.
- Extension to original plans
Craig is an engineer who’s based in Aberdeen, the company he works for expands, buying offices in Portsmouth where Craig is asked to work for 12 months. After 9 months working at the Portsmouth site, Craig agrees to an 18-month extension to the role. From the moment the new contract is signed, Craig’s intended time in Portsmouth becomes 27 months – therefore exceeding the maximum 24 and establishing Portsmouth as his permanent place of work.
At the point of signing his new contract, Craig is no longer able to claim travel expenses relating to a temporary workplace.
- 40% of working time
Jane is an assistant headteacher who lives and works in Darlington. The chain of academies she works for asks that she works in another of their schools in Middlesbrough for 1 day each week over a period of 30 months as they prepare for inspection. Jane will not be able to claim relief on the expenses for traveling to her own school – but she will for her travel to the school in Middlesbrough.
This is because, despite being at the school for more than 24-months, her overall time spent there will not exceed 40% of her overall working time, thus allowing it to maintain ‘temporary workplace’ status.
- Close proximity
Lucy works for an online marketing agency who have two premises in central Birmingham. Lucy is continuing her employment with her company is going to work in a client’s office who are based in different offices a 5-minute walk away. Despite working in an office that is not her own, she is not able to claim tax-relief on travel expenses as the journey would be considered virtually identical to that that she would be making if she were working from her own company’s offices.
- Breaks from the temporary workplace
Tim is an architect who’s working on a series of large projects with a company redeveloping a part of East London – with a projected timescale of 5 years. He works at the London offices for 22-23 months at a time – but is periodically recalled to his company’s head office in Bristol to oversee short 1-2-week tasks – before returning to his East London redevelopment projects.
Although Tim isn’t working more than 24-months at any one time, the period of time away from the longer projects is not enough to ‘reset’ his time in London and reframe it as a temporary workplace. Tim is not able to claim tax-relief on his travel expenses as he is spending more than 40% of his time there. To count as a ‘break’ – Tim would need to be away from the London site for 15+ months – making sure he worked at a different location in the meantime.
As you can see with these examples – it’s often the intended working arrangements that count over how a situation actually pans out. That’s why it’s important to include an accountant in decisions that relate to workers being based somewhere other than their main place of work. A good accountant will be well aware of how the 24-month rule works and be able to use it to the best advantage of the individual and business.