Tax Tip of the Month
April 2010
Employees on the move
One suspects, cynically, that Inspectors of Taxes, who tend to be moved around the country on a whim by HM Revenue & Customs, are given financial help with their moves by their employer. One suspects this because there is a specific tax exemption for relocation expenses, of various sorts, which is available to all employees but one that must be particularly useful for employees who are liable to be moved more than once.
The expenses that can be paid by the employer tax-free are of various types, including not just the actual removal expenses but also additional costs such as interest, staying in the new location while house hunting, carpets and curtains and so on and so on, and the amount that can be exempted is a maximum (fairly generous) £8,000.
From the tax-planning point of view, this relief is interesting because, like quite a number of such tax-efficient forms of remuneration, it is equally open to the shareholder/director of his own company. As a director of a company you own 100%, you are treated just as much as an employee as anyone else. Whereas this is most often seen as a downside, because you have to pay employers’ and employees’ National Insurance etc., it can be an upside where the case in point is asking the taxman to help contribute to your moving costs. The only criterion which applies is that the move should be necessary in order to help you carry out the duties of your employment more efficiently.
