What is the 24 month / 2 year rule for travel expenses?

The 24 month rule allows travelling expenses to be claimed for commuting from your home to your client’s workplace; as long as it meets the criteria as a temporary workplace.

Independent professionals commuting to their client’s site must comply with HMRC’s temporary workplace rules to be able to claim travel expenses.

‘A workplace is a temporary workplace if an employee goes there only to perform a task of limited duration or for a temporary purpose.’

HMRC state that if a period of continuous work lasts for more than 24 months and is performed ‘to a significant extent at that place’ (i.e. 40% or more of your working time is spent there) – the workplace is permanent and travel expenses cannot be claimed.

So, if you’re spending more than 40% of your time at a client’s site, you can no longer claim expenses after 24 months. This rule applies from the start of your service onwards; it does not reset if there’s a break at any point in your service.

Please note:
A workplace stops being temporary as soon as you know you’ll be working on-site for over 24 months (not after this time has elapsed). For example, if you’ve worked for 15 months at a client’s site and then win a contract extension for a further 12 months, you would need to stop claiming expenses as soon as you knew about the extension; rather than after 24 months have passed.

Changing workplace location

Changing location or even working for a separate client does not necessarily negate the 24 month rule. HMRC have provided this example, which details an IT contractor working for three separate clients in the City of London; for over 24 months and to a significant extent. Despite working in separate workplaces, as their travel from home to work is broadly the same every day, there’s no substantial change to the commute, so these workplaces are all classed as the same permanent workplace. As a rule of thumb, there has to be a significant change, either to your commute or the cost, to qualify as a change of workplace.

IR35
If you are working compliantly with IR35 than the 24 month rule will not directly impact your IR35 status. You can learn more about IR35 here.