SE03126 - Removal or transfer costs: non-eligible expenses and benefits - compensation payments for “loss on sale”

Schedule 11A ICTA 1988

If an employer makes a payment to an employee to compensate for the fact that the employee's house has fallen in value, or to make up a shortfall where the house is sold for less than the bridging loan outstanding on it, there is no exemption. The payment is taxable in full. (But see SE00750 for the exceptional circumstances in Hochstrasser v Mayes (38TC673).)

If the employer lends the employee money to cover a shortfall, there is a tax charge under Section 160 ICTA 1988.

If an employer provides a bridging loan and waives part of it because the selling price of the employee's property is less than the amount outstanding the waiver is charge to a charge under Section 160(2) ( SE21741 onwards).