Site Based Rules and Business Expenses

If you work as a freelance contractor you not only need to consider IR35 but also Site Based Rules when claiming Business Expenses.

Site Based Rules relate to business expenses incurred while undertaking a contract at a remote temporary site. Site based expenses include costs such as travel to and from the temporary site, subsistence, accommodation etc.

The important thing to understand is that the moment the temporary site becomes your permanent location you are no longer allowed to claim site based expenses. If you run a contractor limited company this could mean you lose a big chunk of your tax free income.

In order to comply with Site Based Rules you must:

• Intend to undertake multiple contracts in the UK
• Not spend, and not intend to spend, any more than 24 months on a single client site

So long as you comply with Site Based Rules you can claim valid business expenses associated with temporary assignments.

Site Based Rules and Multiple Contracts

If you run your own contractor limited company the chances are that you intend to undertake multiple contracts while working in the UK. If you are only going to undertake a single contract it is usually better and easier to use an umbrella company structure such as Expat Advantage or Payroll Umbrella. For more information on umbrella companies call Commonwealth Contractors now on 0800 294 4388.

Working at multiple client sites in parallel may not be enough to consider you outside site based rules as the HMRC may deem the sites to be a single place of work.

Site Based Rules and the 24 month rule

It is very important to comply with site based rules when agreeing contract extensions. The moment you agree a contract extension that takes you beyond 24 months at a single client site you are no longer allowed to claim business expenses. For example, where a contractor initially agrees an 18 month contract and then agrees a 12 month extension, the contractor is only allowed to claim business expenses for the first 18 months. Eligibility for expenses is lost the moment the contractor commits to go over 24 months in total rather than after month 24.

This may also have consequences for your IR35 status if running your own Limited Company. Your IR35 status depends upon the terms and conditions of the contract your limited company is engaged upon and day to day working arrangements. If you have been turning up to the same client site for 2 years + the HMRC may have reason believe you are inside IR35. However, working on site for more than 2 years alone would not be enough to consider you inside IR35 but it may give reason to investigate further.

To find out more about going into business with your own Limited Company call Commonwealth Contractors now on 0800 294 4388 or submit your details and we will get right back to you.

Related Contractor Ltd Companies Pages:

• Contractor Limited Companies
• • Contractor Limited Companies
  • IR35 Assessment Tool
• Managed Service Companies
• • Managed Service Companies
  • MSC Involvement
• UK Dividends
• • Freelance Contractors and UK Dividends
  • Calculating and Paying Dividends
  • Dividend Tax
• Income Tax and National Insurance
• • Setting a Salary
  • Registering for PAYE
  • Income Tax and National Insurance
  • PAYE Payments and Returns
  • PAYE Investigation
• Business Expenses
• • Claiming Business Expenses
  • Contractor Expenses
  • Home Based Rules and Business Expenses
  • IR35 and 5% Expense Rule
  • Site Based Rules and Business Expenses
• VAT Guide
• • VAT Guide for Contractors
  • The VAT Flat Rate Scheme
• Timesheets, Invoices and Payments
• • Contractor Timesheets
  • Limited Company Invoices
  • Client and Agency Payments
• Section 660 and Income Shifting
• • Section 660a and Income Shifting
  • Section 660a Background
• Dealing with Contracts Inside and Outside IR35
• UK Corporation Tax
• Directors Duties and Responsibilities
• Opening a Limited Company Bank Account
• Loans and Mortgages
• Contractor Limited Companies and UK Immigration