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Travel Expenses – Guidance for Locums



If you qualify for travel expenses you can claim this on your P11d at the end of the tax year, this includes PAYE and Umbrella and Ltd Company Workers.

To qualify as a temporary workplace, all of the following conditions have to be met (s. 339(3)):

  • It must be a place which the employee attends in the performance of the duties of the employment.
    • You must attend it either:
      • for the purpose of performing a task of limited duration,
      • for some other temporary purpose

  • It must not be treated as a permanent workplace by virtue of any of the following rules, each of which is considered in the paragraphs below:

The 24-month rule

The fixed-term appointment rule

The depots and bases rule, or

The area-based employee’s rule.

The tax rules say that travel from home to a permanent workplace is not an allowable expense for tax purposes. By contrast, travel from home to a temporary workplace is an allowable expense

The HMRC 24 month rule

The 24 month rule is a specific condition that lets you claim travel expenses for trips between your home and your client’s offices or a “temporary workplace”. The idea behind it is that visiting a client’s workspace – as opposed to your own HQ – requires special travel and can lead to undue costs.

This travel should not be part of your standard commute; HMRC sees travel to a temporary workplace to be a business expense, unlike commuting.

The rule exists to help define what is (and isn’t) a temporary workplace. In order to set clear guidelines and limit abuse of this tax exemption, HMRC created a (relatively) simple test to figure out whether a site is temporary or not.

Put simply: if the conditions of the 24 month rule are met, you’re dealing with a permanent workplace.

So what are those conditions?

How the 24 month rule works

The 24 month rule has two key conditions. In order for the rule to apply – and for a business to NOT be able to claim this travel expense – both of these must be met:

  1. The employee must have spent or be likely to spend more than 40% of their working time at a workplace, AND;
  2. They must attend it or be likely to attend it over a period lasting more than 24 months.

If you meet both of these criteria, you cannot claim tax relief on your travel expenses to and from a workspace. In other words, if you spend 40% of your time in an office or onsite for more than 24 months, this is a permanent place of work.

Important extras to factor in

Here are a few key considerations to keep in mind as you apply for tax relief:

  • As soon as you become aware that a contract will last longer than 24 months, you must stop claiming relief. So if you know on day one that this will be a two-year contract, you’ll never be able to claim.
  • 24 months is the total calendar period in question, and not the actual amount of time you spend working with a client. So if you work two days a week with them starting January 1, or if you work six months on and then six months, you’ll reach 24 months on January 1 two years from now. This is the case even if you sign new contracts along the way.
    • The 40% rule (above) applies, however. So a 15-month break (60% of any two-year period) would be enough to ensure that the 24 month rule doesn’t apply.
  • If the length of the contract is unclear, you can claim tax relief if it’s assumed that the agreement won’t last 24 months or more.
  • It’s possible to have more than one permanent workplace. If the 24 month rule is met, the workplace is permanent, even if the rule can also be met in other workplaces.
  • Tax relief is not available for private travel. That is travel to any place that an employee doesn’t need to be for work purposes.

Fixed Term Appointment Rule

An employee undertaking a fixed-term appointment is not entitled to relief for home to work travel, even where it lasts less than 24 months, if the employee attends the workplace for all, or almost all of the period which they are likely to hold the appointment.

About The Author:

Richard Ward

Managing Director

© Keystone Healthcare Ltd 2021