At Price Hill & Co Limited, we aim to maximise the take home pay of our clients. We use different mix of tax strategies to ensure that our clients take advantage of all legally available expenses and allowances.

Consultants running their own limited company can treat their “home” as their main place of work. They are then allowed to claim business mileage and subsistence expenses. However they are only allowed to claim these expenses if the contract with the end client is “Temporary”.

A contract is deemed temporary if when the contract is signed it is no more than 24 months.

If upon renewal of the contract, the total length exceeds 24 months, then from the point of renewal it is no longer deemed as temporary.

Example 1

On 1st January 2000 you sign a contract for 12 months with Company A. (up to 31/12/2000)
On 1st November 2000 the contract is renewed for 15 months – (Up to 31/03/2002)

Rules:
The first contract is deemed to be Temporary as the length was less than 24 months. –
On 1st November the contract is no longer Temporary as upon signing it exceeds 24 months.

1. Contract is temporary from 1st January 2000 to 1st November 2000. (11 months)
2. Contract stops being temporary from 1st November 2000.

Example 2

On 1st January 2000 you sign a contract for 12 months with Company A. (up to 31/12/2000)
On 1st November 2000 the contract is renewed for 11 months – (Up to 30/11/2001)
On 1st November 2001 the contract is renewed for a further 12 months. (Up to 30/11/2002)

Rules:
The first contract is deemed to be Temporary as the length was less than 24 months. –
On 1st November 2001 the contract is still Temporary as upon signing it does not exceed 24 months from initial signing.

1. Contract is temporary from 1st January 2000 to 31st November 2001. (23 months)
2. Contract stops being temporary from 1st November 2001.

IF YOU CONTRACT FOR ANOTHER COMPANY

If you start contracting with another company, then the 24 month rule starts again.
So if you have a contract with Company A for 20 months and then you get a contract with company B for 20 months, then both contracts are deemed temporary.

IMPLICATIONS OF CONTRACT WHICH IS NOT TEMPORARY

From the date the contract sops being temporary, the consultants cannot treat the travel from “home” to client site as an expense. They are also not allowed to claim certain subsistence expenses hat a normal employee would not normally be allowed to claim.