Temporary Workplaces

2 July 2017

What is a permanent workplace?

This is you travelling to and from your normal workplace. Source Accounting staff travel to the office every day either by bus or their own car – Source Accounting employees can’t claim any expenses for this as it is classed as “ordinary commuting to work”.

What is a temporary workplace?

There are two key concepts to understand here - the 24 month rule and the 40% rule.

The 24 month rule

As long as you are not working in a location for 24 months or longer the location will be considered to be a temporary workplace, therefore travel can be claimed.

However, if you sign a contract that means you know you will be in the same location for more than 24 months then you cannot claim travel from that point. It is the point at which you know you will be there 24 months or longer at which the location changes from being a temporary workplace to a permanent one.

If for example you sign a contract now for 12 months and then 10 months into the contract you sign an extension for 18 months, then the location would change to being a permanent workplace 10 months in so you could only claim the first 10 months travel.

The 40% rule

Even if you do breach the 24 month test, there is still a chance to claim some of your travel costs if the location represents less than 40% of your overall business working time.

Below 40% and it will still be considered a temporary workplace. You need to assess the previous 24 months on a rolling 24 month basis all the time to see if the 40% rule has been breached at any point.

Once it is breached you have to stop claiming your travel, however keep your eye on the rolling 24 months position each month as you may dip under the 40% again, at which point you can start claiming your travel again.

Note that it is your responsibility to monitor this and update us if your situation changes.

What about if you work on contracts in similar areas?

This is where things get a bit more complicated. If you work with Client A in Location A for 15 months and then move to a new contract with Client B in Location B for 12 months, location A and B must be in different locations otherwise they could seen to be in the same 'patch' by HMRC.

If workplaces are in similar locations and there is not much difference to the travel route then HMRC could argue they are one permanent workplace.

If your new workplace is in a different street but is still near to the previous location then this would not be different enough.

So for example, if you're a contractor working at 1 High Street of your city and you move from client to another located at 200 High Street, also in the same street, HMRC could argue that there is not enough of a change to the journey and consider them one single workplace.

However, if you work for one client in the East of your city and your next client is, for example, in the West of your city then you have a much better argument that there is a big enough change to your journey to treat these as separate workplaces.

The tricky thing is that there is no absolute answer as to when similar locations are treated as the same patch or not - you need to make sure you have a robust enough answer to HMRC if they were to ask you the below question:

Can you provide evidence that shows that there is a significant difference in the journey to location A and location B in terms of time and cost?

Be careful

Something to be careful of is if you start trading through your limited company, only work for one client, and close the company down after, say, 12 months, this would be seen to be a permanent workplace therefore travel would be disallowed. This is because although the duration is less than 24 months, you have only had a single client and the company ceased trading before the 24 months was up.