MilesheetContracting: the travel rules that cost the most to get wrong
Site-based work, the 24-month clock, and why the first day of a contract can decide whether any of the travel is claimable.
Contracting produces exactly the pattern the temporary workplace rules were written for, and exactly the ambiguity that makes them expensive.
The basic position
Travel to a temporary workplace is business travel. Travel to a permanent workplace is commuting and is not claimable.
For a contractor moving between client sites, most engagements start out looking temporary — which is why the travel is usually claimable, and why it is worth understanding when that stops being true.
The 24-month rule, applied to a contract
A workplace ceases to be temporary once you have attended, or expect to attend, for more than 24 months, where attendance is for a significant part of your working time.
The word that matters is expect.
- A twelve-month contract, expected to be twelve months: temporary. Travel claimable.
- A three-year contract, known on day one: permanent from day one. No claimable travel at all, not even for the first 24 months.
- A twelve-month contract extended twice, where at month 20 it becomes clear it will run past two years: travel stops being claimable from the moment the expectation changed, not at month 24.
That third case is the one that catches people, because nothing visible happens on the day the position changes.
How the engagement shape changes the answer
| Engagement | Expected length | Temporary? | Travel claimable |
|---|---|---|---|
| 6-month contract | 6 months | Yes | Throughout |
| 12-month, extended to 18 | 18 months | Yes | Throughout |
| 12-month, extended to 30 at month 20 | Over 24 | Until month 20 | Up to the extension only |
| 36-month contract from the outset | 36 months | No | None |
| 30 months, one day a fortnight | Over 24, low attendance | Yes | Throughout |
Which route the claim takes
| Structure | Mechanism | Typical restriction |
|---|---|---|
| Own limited company | Company reimburses at approved rates, tax-free | Record must support it |
| Umbrella | Expenses generally restricted | Usually not claimable under SDC |
| Agency PAYE | Similar restrictions | Usually not claimable |
| Self-employed, direct | Simplified expenses or actual costs | Choice is per vehicle |
Umbrella, limited company, or agency payroll
The mechanics of the claim differ:
- Own limited company: the company reimburses you at approved mileage rates, tax-free, and deducts the cost. You are an employee of your own company for this purpose.
- Umbrella: expenses are generally restricted, and travel to a workplace under supervision, direction or control is usually not claimable at all.
- Agency PAYE: similar restrictions apply.
The underlying travel rules do not change; what changes is whether there is a route to claim through.
The record is the defence
Contractor travel claims are looked at more often than most, because the sums are larger and the temporary-workplace question is genuinely arguable. A contemporaneous journey log — recorded as you drive, not reconstructed at year end — is the difference between a position and an assertion.
Record every journey, tag the client site as Business while it is genuinely temporary, and if a contract extends past the point where you expect to be there more than two years, change the tag from that date. The history stays, the claim adjusts, and the record shows exactly when your expectation changed and why.
That last part is worth more than it sounds. "I stopped claiming in month 20 because the second extension was signed" is a defensible story with a date attached.
Sources
- HMRC — 490: Employee travel, a tax and NICs guide
- HMRC — Employment Income Manual EIM31815: temporary workplace
- HMRC — Claim tax relief for your job expenses: vehicles you use for work
- HMRC — Self Assessment: keeping your records
General information, not tax advice. Contractor travel is fact-sensitive and the umbrella position in particular has changed over time: take advice on your own arrangement.