If the conditions relating to change of job and home are met there is an upper limit on the amount that is free of tax and NICs. In calculating whether the upper limit has been breached the amount to take into account for each benefit or expense is the amount that is taxable or liable for NICs.

Tax

The first £8,000 of expenses and benefits is free of tax. This limit applies once for the whole relocation, so if assistance is provided over more than one tax year the amount of the tax free limit available in the second year is reduced by the value of relocation expenses and benefits that were provided in the first year. For example, if the employee gets £6,000 worth of relocation expenses and benefits in the first year, the maximum that can be provided free of tax in the second year is £2,000.

NICs

There is no upper limit on the amount of exempt expenses and benefits that are free of Class 1 NICs. But the £8,000 limit applies for Class 1A NICs purposes in the same way as for tax purposes. This means that any relocation benefits or expenses paid for a relocation which exceed £8,000 are liable for Class 1A NICs. If you need more guidance on this look at NIM06120 and NIM16275.

Level 3 Table of Contents