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Working overseas and the 24 month rule

6th July 2017

The basic 24 month rule still applies – i.e. If you are an employee or director and work, or know you will work, at a temporary workplace for 40% plus of your working hours for over 24 months - you are caught by the ‘24 month rule’ and can no longer get tax relief on related travel, accommodation and subsistence costs.  And you only reset the ‘24 month rule’ clock if you take a long break from the site or move to another site (see HMRC online booklet 490).  So, if you get a temporary contract overseas, and you aren’t caught by the ’24 month rule, you can claim tax relief on the cost of travelling both to and from the overseas site; plus accommodation and subsistence costs while working overseas. 

But there are other rules – known as ‘special rules’ – that apply to UK employees based overseas and consequently, even if you are caught by the ’24 month rule’, you are still entitled to tax relief on the cost of journeys to and from the overseas site; plus accommodation and subsistence costs where the employer (your company) pays for it, or reimburses you.  And, either way, if you are based overseas for 60 days or more, you can also claim for the cost of two return journeys per tax year for your spouse and children.  So it’s a bit like ‘heads you win; tails HMRC lose’!

Example: John has a Limited Company, he obtains a contract in Toulon for 18 months and claims tax relief on his travel, subsistence and accommodation costs – including coming home twice a month at weekends.  He can claim for all of his travel, accommodation and subsistence costs he incurs – including the weekend flights.  If his 18 month contract is then extended by 9 months, he then becomes caught by the ’24 month rule’ – but he can still claim for the weekend flights and the accommodation and subsistence costs so long as the Company pay directly, or reimburse John, for the costs (and any director of their own Company would always ensure this happened).