Does HMRC’s 24-Month Rule Affect Umbrella Workers?
This article explains when and how HMRC's 24-month rule applies to umbrella company contractors, covering travel expenses, the criteria for a 'temporary workplace', and its practical impact.
Understanding HMRC’s 24-Month Rule
If you’re an umbrella company contractor—or thinking about becoming one—the HMRC 24-month rule is a major piece of the expenses puzzle. But what is it? And does it really apply in your case?
First, let’s break it down:
The 24-month rule is HMRC’s way of defining when a workplace is considered ‘temporary’. If you’ve been at the same site for more than 24 months, you can no longer claim tax relief on travel and subsistence costs to that workplace.
Umbrella Company Contractors: Why Does It Matter?
Working via an umbrella company transforms the way you handle expenses. Since the umbrella becomes your official employer (even if you work with a string of clients), your status for tax and travel purposes gets a bit complex. Here’s what you need to know:
- Umbrella employees ARE covered by the 24-month rule.
- The rule restricts the claiming of travel and subsistence expenses after you’ve worked at the same place for two years.
- If you switch contracts but keep returning to the same location, the clock keeps ticking.
How The 24-Month Rule Works
- The place where you perform your duties is a ‘workplace’.
- If your attendance will exceed 24 months (or is expected to), it becomes a ‘permanent’ workplace for tax purposes.
- This means no more tax relief for journeys to and from that site.
Practical Example Table
| Situation | Claim Expenses? | Explanation |
|---|---|---|
| New assignment, first 12 months | Yes | Under 24 months, workplace is ‘temporary’ |
| 2-year anniversary at same client/site | No (from this point onwards) | Now classed as ‘permanent’, expenses not claimable |
| Switch to new client/site after 18 months | Yes (reset clock) | ‘Temporary’ status starts again on a genuinely new site |
Common Questions Contractors Ask
Q: Is the 24-month rule based on calendar time or time worked?
It’s all about expectation. If you expect to be at the site for more than 24 months—even if you only work intermittently—the ‘permanent’ status kicks in.
Q: What if I work at other sites, too?
If the original site stays your main place of work, the rule keeps applying. For truly separate sites, a new 24-month period can start.
Q: If my project briefly pauses, does the clock reset?
No. Short breaks (annual leave, etc.) don’t interrupt the 24-month rule. Only changing to a completely new workplace does.
Important Considerations (And a Handy Checklist)
- Are you returning to the same site?
- The 24-month limit applies.
- Are you starting a genuinely new assignment at a new site?
- Fresh 24 months for claims!
- Does your umbrella company check these rules?
- Good ones do. Always double-check their process.
Pull Quote
Travel and subsistence claims can make a real difference to your take-home pay—but only if you stick to the 24-month rule. HMRC takes a strict line, so don’t guess.
What To Do Next?
- Review your assignment history.
- Ask your umbrella company how they track the 24-month rule.
- Be proactive—keep your own notes and dates, so you know exactly where you stand.
| Step | Action Needed |
|---|---|
| Check contract dates | Mark assignment start/end in calendar |
| Confirm with umbrella | Ask about their 24-month monitoring |
| Get advice, if needed | Speak to an accountant |
Understanding the 24-month rule isn’t just box-ticking—it’s about protecting your earnings and ensuring you stay HMRC compliant.
Need a checklist or detailed advice for your personal situation? Reach out to a contractor accountant or consult HMRC directly. Small steps now can save a lot of hassle later.
