As a director of a limited company it may be possible to claim the costs of travel to and from your worksite. Under HMRC guidance where a director is able to demonstrate a long-term commitment to contracting or an ‘overarching contract’ with the limited company, it may be possible to claim reimbursement of ‘main site’ expenses.
In essence, if you have decided to make contracting your business using your limited company as a vehicle and believe you will have a series of assignments in years to come, you may be able to claim main site expenses from your first assignment.
Conversely, if, as a director of your limited company, you expect only to work at a single location throughout your time as a director this location will be regarded as a permanent workplace and expenses will not be allowable.
As a director it is your responsibility to determine if you have this long-term commitment. You should be aware that HMRC might ask you in case of a future enquiry. You can find additional information in the HMRC guidance the Helpsheet available on HMRC website. Any such claim is still subject to the 24-month rule.
The 24-month rule
HMRC specifies that travel to and from a worksite is an “allowable” expense if the period of time at the site is both; expected to be less than a maximum of 24 months, including any time spent on-site prior to the current contract and; does not exceed 24 months. If at any time the contract is actually extended, or anticipated to be extended, beyond 24 months, no further travel to and from the site will be allowable as the work place would be deemed to be permanent.
A contractor with a history of taking successive assignments will eventually decide that a particular assignment will be their last. They may also decide to take a permanent position working directly for their client when the assignment is completed. From the point when that decision is reached. that workplace will no longer be a temporary workplace.
The 40% exception
One exception to the above principle may arise where you spend 40% or less of your time at a workplace. If this is the case, all expenses incurred in travelling to and from that site are allowed regardless of the 24-month rule, provided the site is a temporary workplace. The claim may continue indefinitely for as long as circumstances continue to satisfy the 40% rule.
In addition, travel expenses incurred visiting sites which are not the main worksite will be allowable provided that you spend less than 40% of your time at that site.