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Site Based Rules and Business Expenses
If you use an Umbrella Company one of the biggest benefits (besides saving yourself a load of admin) is that the umbrella company allows you to claim certain business expenses incurred while working on contract. Some expenses such as professional training, subscriptions to professional bodies, and business phone call costs, can always be claimed. However, most are linked to ‘Site Based Rules’.Business expenses normally include items such as site based travel, site based subsistence, business accommodation, postage and stationary etc. The basis on which you claim these business expenses is that you are a worker, temporarily assigned to a remote client site. The moment that the site becomes your permanent place of work, ‘site based’ business expenses are no longer allowable. If a site is your permanent place of work, your cost of getting there is a personal commuting cost rather than a business expense.
Freelance contractors that join Commonwealth Contractors benefit from regular site based rules checks. Each time a new contract is agreed we check to ensure that a contractor is compliantly claiming business expenses. To find out more about our umbrella company solutions speak to an expert on 0800 294 4388 or Submit your details and we will get right back to you.
What are Site Based Rules?
Site Based Rules outline the basis on which a site is considered to be temporary. To comply with Site Based Rules a contractor must:- Intend to undertake multiple contracts while freelancing in the UK,
- Intend, after working at their current project site, to move to another project at a different site,
- Not, and must not intend to spend any more than 24 months on a single client site
So long as site based rules are complied with, site-related business expenses are usually allowable, subject to company policy and tax law.
Undertaking multiple contracting assignments
It must be your intention to undertake multiple contracts while freelancing in the UK. If you only intend to undertake a single assignment the HM Revenue and Customs will consider your site to be your permanent place of work and will not allow you to claim business expenses associated with the contract.The 24 month rule
To comply with the 24 month rule you must not and must not intend to spend anymore than 24 months on a single client site. It is particularly important to ensure you 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 business expenses are no longer allowable. 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 / expects to go beyond 24 months in total rather than the moment that have actually been there 24 months.Where a contract requires you to work at a number of client sites in parallel, HM Revenue and Customs may consider the sites to jointly constitute a single place of work.
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