SE03139 - removal or transfer costs: flat rate allowances

Schedule 11A ICTA 1988

Before the introduction of the statutory exemption employers often paid flat-rate disturbance allowances to employees. These were intended to cover miscellaneous costs, and were allowable under ESC A5 if the conditions in SE03140 (paragraph SE1232) were met.

The statutory exemption provisions works in terms of actual expenses incurred, so strictly there is no place in the new scheme for flat-rate allowances, which should be subject to PAYE. In practice, however, you may allow an employer to treat such payments as qualifying for exemption if all the following conditions are met

• the amounts are in themselves reasonable. Use the figures in SE03140 (paragraph SE1232) as a guide.
• you are satisfied that, taking one employee with another, the amounts paid by an employer are in fact expended on qualifying expenses.
• it is clearly understood that the flat-rate payment will be taken into account when deciding whether the £8,000 limit has been reached.