Regulations 2 and 46 Income Tax (Employments) Regulations 1993

The exemption for qualifying removal expenses and benefits is limited to £8,000 per employee per relocation. If the total of qualifying expenses and benefits exceeds £8,000 the excess is taxable.

Regulation 2(3) of the Employment regulations states that PAYE should not be deducted from qualifying expenses which together with benefits exceed the limit of £8,000. Regulation 46(2)(b) says the excess should instead be reported on form P11D or P9D.

Payments to an employee which are not qualifying expenses - for example a compensation payment for “loss on sale” - should follow the normal PAYE rules.