Jul
28
2010
Contractors warned over 24 month rule
The HMRC has warned contractors to be wary of the 24-month rule which applies to claims for travel and subsistence whilst working on temporary contracts.
Zeva.co.uk claimed that contractors using umbrella companies were told to keep a record of when they started work in order to avoid going over the two year limit which signals the end of temporary employment and the start of permanent work.
"HMRC also has a 40 per cent rule, meaning that you have to consider whether you have worked over 40 per cent of your time in the last 24 months at the same place. If you have, then you will not be eligible to make a claim for travel and subsistence," it stated.
The website added that the legislation can be complicated and that is where an umbrella company could be useful.
Friends Provident recently recommended that contractors seeking work remain proactive and seek to get on a company's database rather than waiting for work to be advertised.
Zeva.co.uk claimed that contractors using umbrella companies were told to keep a record of when they started work in order to avoid going over the two year limit which signals the end of temporary employment and the start of permanent work.
"HMRC also has a 40 per cent rule, meaning that you have to consider whether you have worked over 40 per cent of your time in the last 24 months at the same place. If you have, then you will not be eligible to make a claim for travel and subsistence," it stated.
The website added that the legislation can be complicated and that is where an umbrella company could be useful.
Friends Provident recently recommended that contractors seeking work remain proactive and seek to get on a company's database rather than waiting for work to be advertised.