Contractor Resources - Travel and the Two Year Rule

1. A company worker can only claim tax allowable travel & accommodation for a maximum of 2 years when working on the same location when 40% or more of the time worked is spent on this same location (not necessarily for the same client).

2. When working away from home on business an employee can claim £5 tax/NI free per night from the company for incidental expenses (no receipts needed) in addition to subsistence costs (£10 if working outside the UK).

3. Business miles using own car- claim 40p per mile as the maximum allowable for first 10,000 miles (25p per mile thereafter). 2p per mile can also be reclaimed for VAT if you are not on the VAT Flat Rate Scheme.

4. Mileage log for each journey should always be maintained.

5. Remember this is a workplace rule (not working for the same client rule). As soon as the contract exceeds 2 years and you are still working at the same place, it is no longer classed as a temporary workplace unless less than 40% of your working time is spent there over a given period.

If you have any questions on the above please Contact Us at your nearest office Or, call +44 (0)141 944 6000 to speak to one of our experienced specialist contractor accountants.

You can set up a formal rental agreement but it is debatable whether or not a tax inspector would accept a significant increase in reclaimable amount via this route.

If you have any questions on the above please Contact Us