Where an employee has to move home because of their work, the employee is entitled to tax relief for the first £8,000 of qualifying removal expenses where these are paid or reimbursed by, or on behalf of, the employer.
Employees are not entitled to tax relief for expenses they pay out of their own funds and which their employer does not reimburse.
Some of the removal expenses for which tax relief is available include the cost of making certain journeys and related subsistence.
For example they might include:
preliminary visits to the new location
travelling between the old home and the new workplace
travelling between the new home and the old workplace (where the employee moves house before moving jobs)
temporary living accommodation
travelling between the old home and the temporary living accommodation
travelling from the new home to the temporary living accommodation (where the employee moves house before moving jobs)
travelling from the old home to the new home when the employee moves house
Other Relocation Costs
Some relocation costs up to £8,000 are exempt from reporting and paying tax and National Insurance. These are called ‘qualifying’ costs and include:
the costs of buying or selling a home
buying certain things for a new home
These are only qualifying costs when:
a new employee is moving area to start a job with you
an existing employee is changing their place of work within your organisation
the costs are paid before the end of the tax year after the one in which the move took place
the employee’s new home is reasonably close to the workplace and their old home isn’t
For qualifying costs over £8,000, you may have to report and pay tax and National Insurance.