If your employer helps you to move home because of your job, any payments you receive, or any goods or services provided for you, are treated as part of your earnings for tax and NICs purposes. However, the first £8,000 of any help you get from your employer is exempt from tax and NICs as long as certain conditions are met.
You can qualify for the exemption if
But, if your employer pays you a sum of money that you can use as you wish, no exemption will be available. The full amount would be chargeable to tax and NICs
No, but the home you move to must become your main residence.
If, for example, you stay in your new home only during the
week, return to your existing family home most weekends and
your family do not intend to move permanently to your new
home, then your old home will probably remain your main residence.
In that case, you would not be entitled to the relocation
exemption.
But, if you buy a new home, move into it with your family
and rent out your old home, your new home will probably become
your main residence. If it does, you will qualify for the
exemption.
Most expenses connected with buying and selling a home, moving possessions, and making preliminary visits to the new location qualify for the exemption. For tax, the exemption is limited to the first £8,000 but there is no equivalent limit on qualifying expenses for NICs.
There is no time limit for NICs. But, to get tax relief your expenses must be incurred, or the benefits provided, before the end of the tax year following the one in which you start your new job (a tax year runs from 6 April one year to 5 April the next). The date you move home does not matter so long as the move satisfies the conditions set out above.
So, if you start your new job
If you cannot use all your exemption before the end of your time limit, consider contacting your Tax Office about an extension. They may be able to extend the time limit if, for example, you have to delay moving to allow a child to complete school exams, or because you cannot sell your old home within the time limit.
The same rules apply to all payments, goods or services you receive because of your job, whether from your employer or someone else.
Expenses and benefits that may qualify for exemption are
There are some payments, goods or services your employer may provide, which can never qualify for exemption and are, in fact, subject to tax and NICs in full. They are
If you take out a loan and your employer reimburses you for the interest payments, or pays them on your behalf, they may qualify for exemption.
If your employer makes arrangements to provide you with a cheap or interest- free bridging loan, this may be a taxable benefit that does not qualify for exemption. However, you can apply to your Tax Office for additional relief providing
The table at the end of this leaflet shows the amount of tax and NICs chargeable for each type of expense or benefit that your employer may provide. You can also get more information from your Inland Revenue Enquiry Centre, Tax Office or Inland Revenue (National Insurance Contributions) office.
Your employer will tell us about any help you are given. We will review your tax liability and, if necessary, will adjust your PAYE code as a result.
Your employer will let you have the same information that it provides to us, by 6 July following the end of the tax year.
If you get a Tax Return, you will need to refer to the information when you complete your return. Sometimes employers pay the tax on behalf of their employees under an arrangement with us called a PAYE Settlement Agreement (PSA). If so, you do not need to include it on your tax return. If in doubt, ask your employer whether this applies to you.
If you do not get a Tax Return, you do not need to tell us about the help you receive from your employer. We will let you know about any tax due or repayable for the tax year.
Your employer should deduct tax and NICs on any payment made to you that cannot qualify for exemption. Any additional tax that is due will be collected by sending you a tax return after the end of the tax year, or, if the amount is small, by an adjustment to your PAYE code.
Your employer may decide to help you pay any tax or NICs. You need to know whether this applies to you because if you get a tax return, you will not have to include anything for relocation expenses or benefits. If in doubt, ask your employer.
The same rules apply to any help you get from your employer
if you are coming to work in the UK from abroad, or moving
to work abroad from the UK. You are entitled to the £8,000
exemption in the usual way.
If you are not domiciled in the UK and you came to work here
after living abroad, in addition to the £8,000 relocation
exemption, you are entitled to two further tax reliefs.
Broadly, you are domiciled in the country where you have your permanent
home. This is explained in more detail in Residents
and non- residents. Liability to tax in the United Kingdom (PDF 640K).
There are also special rules on travelling expenses for people
going to work abroad. If you qualify under these rules, you
can get tax relief for your travelling expenses as well as
the £8,000 relocation exemption. For more details, contact
your Tax Office.
The expenses and benefits your employer supplies directly
to you are subject to tax and NICs in the normal way. Any
services supplied by a relocation company are also subject
to tax and NICs, based on how much your employer has to pay
for them. The £8,000 exemption applies to all expenses
and benefits, as long as the qualifying conditions are met.
But, some costs incurred by your employer are ignored when
calculating the benefit to you, if you sell your home to them
or to a relocation company.
If your employer arranges for you to sell your home for a
guaranteed minimum amount to them or a relocation company,
it may affect both your income tax and your capital gains
tax liabilities, depending on the exact arrangements. You
should ask your employer or contact your Tax Office if you
want to know how your tax might be affected.
The following examples show how different relocation packages are taxed.
Bob moves from Bristol to York to start his new job on 13 May 2004. He buys a new house in York on 28 July and moves that day, having stayed in a hotel between May and July. His family joins him on 5 August and his house in Bristol is sold on 23 August 2004. The expenses paid by his employer and his liability to tax and NICs are shown opposite.
| Expenses and benefits qualifying for exemption | Amount subject to tax | Amount subject to NICs |
|
| Travel and subsistence | |||
| Hotel accommodation May - July | 1,880 |
||
| Weekend travel, Bristol to York | 980 |
||
| Family visits to look for new home | 800 |
||
| Costs of moving possessions | |||
| Removal van hire | 500 |
||
| Costs of disposing of home | |||
| Legal fees (sale) | 1,000 |
||
| Estate agents fee | 1,600 |
||
| Replacement domestic goods |
|||
| Curtains, carpets, cooker | 1,800 |
||
| Costs of acquiring new home | |||
| Survey fee | 400 |
||
| Stamp duty | 900 |
||
| Legal fees (purchase) | 1,200 |
||
| Interest on bridging loan |
|||
| Reimbursed by employer | 600 |
||
11,600 |
|||
Less exemption (limited) |
8,000 |
No limit |
|
3,660 |
NIL |
||
| Expenses and benefits not qualifying for exemption | |||
| Disturbance allowance | 2,000 |
2,000 |
2,000 |
| Payment for loss on part-used season ticket | 200 |
200 |
200 |
| Total expenses and benefits subject to tax and NICs | £5,860 |
£2,200 |
Linda moves, with her job, for three years from London to Swindon in October 2004. She decides to keep her flat in London, and rent a house in Swindon. She starts work in Swindon on 7 October and finds a house to rent on 6 January 2005. Meanwhile, she lives in a house rented by the company. The expenses paid by her company and her liability to tax and NICs are shown below.
| Expenses and benefits qualifying for exemption | Amount subject to tax | Amount subject to NICs | |
| Travel and subsistence | |||
| Chargeable value of employer-provided house (rent paid) | 1,500 |
||
| Visits to Swindon in anticipation of move | 120 |
||
| Costs of moving possessions | |||
| Removal van hire | 350 |
||
| Temporary storage costs (October - January) | 400 |
||
| Costs of acquiring new home | |||
| Legal fees to rent new property | 800 |
||
| Less exemption | 3,170 |
NIL |
NIL |
| Expenses and benefits not qualifying for exemption | |||
| Allowance to buy additional domestic goods (old home not sold) | 2,000 |
2,000 |
2,000 |
| Council tax on old home | 600 |
600 |
600 |
| Total expenses and benefits subject to tax and NICs | £2,600 |
£2,600 |
If an expense or benefit qualifies for exemption, the amount to be set against the £8,000 limit is the chargeable amount identified in the following table.
| Type of expense or benefit provided by your employer | The chargeable amount |
| Money given to you | The amount paid to you |
| Money to someone else to settle your personal bills | The amount paid by your employer, including VAT |
| Payment to someone else to provide a service for you (hotel accommodation, rail travel, legal services) | The amount paid by your employer, including VAT |
| An asset given to you | The market value of the asset |
| The loan of an asset, other than a car or van * | 20% of the market value when it was first made available, less any contribution you make. Charged annually for as long as you have use of the asset |
| A voucher given to you | The cost to your employer of providing the voucher, including VAT |
| Accommodation rented by the business | The rent paid by your employer for the period of your stay, less any contribution you make |
| Accommodation owned by the business | A proportion (depending on the length of your stay) of the gross value of the accommodation (taken from the rating lists) plus an additional charge if the property cost your employer more than £75,000, less any contribution you make |
* The amount chargeable to tax and NICs is based on specific statutory rules. Only cars and vans used solely for relocation purposes can qualify for exemption.
