Travel between your office and worksite is a normal part of doing business for many workers but the cost of that travel can quickly add up.
To reflect this, HMRC offers tax relief on travel expenses to a non-permanent place of work. But it’s not available in certain circumstances - specifically when the “24 month rule” applies.
In this article, we will explain what the 24 month rule is and when it applies.
What is the 24 Month Rule?
The 24 month rule is a condition that lets you claim travel expenses for trips between your home/office and your client’s offices or a “temporary workplace”. The idea behind it is that visiting a client’s workspace requires special travel and can lead to undue costs.
To be clear, this travel should not be part of your standard commute; HMRC sees travel to a temporary workplace to be a business expense, unlike commuting.
So, what qualifies as a temporary workplace? HMRC has laid out some criteria to help clarify this which we will break down for you below.
How does the 24 month rule work?
The 24 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:
The employee must have spent more than 40% of their working time at the workplace
They must attend it over a period lasting more than 24 months. (Once the contract length exceeds 24 months the rule would apply or once the total duration exceeds 24 months if there is no contract)
If you meet both of these criteria, you cannot claim tax relief on your travel expenses to and from a workspace. In other words, if you spend 40% of your time in an office or onsite for more than 24 months, this is considered to be a permanent place of work.
One thing to note: the 24 months mentioned here refer to the total calendar period, not necessarily continuous working time. So, even if you have breaks in between, the clock keeps ticking towards that 24-month mark.
However, if there's uncertainty about the contract's duration and it's assumed to be less than 24 months, you can still claim tax relief.
It’s possible to have more than one permanent workplace. If the 24 month rule is met, the workplace is permanent, even if the rule can also be met in other workplaces.
Also, remember that tax relief isn't available for personal travel – it's strictly for work-related journeys. If you're in doubt about whether a journey qualifies, it's always best to consult with a professional.
You can always reach out to one of our expert accountants via Intercom if you have any questions relating to this. You can find the Intercom icon in the bottom right corner of your screen when logged into your Ember account.