How much relocation assistance can an employer pay tax-free in the UK?

Full answer

When an employer requires an employee to relocate, they can pay or reimburse qualifying relocation expenses up to £8,000 per move tax-free under s271 ITEPA 2003. **The £8,000 exemption** The exemption applies per eligible relocation (not per tax year). If the employer pays or reimburses £8,000 or less of qualifying costs, there is no income tax and no NI for the employee. The employer also has no Class 1A NI liability on the exempt amount. **Qualifying relocation costs (s272 ITEPA 2003)** - Costs of disposing of the old home: estate agent fees, legal fees, mortgage redemption penalties, surveys - Costs of acquiring the new home: legal fees, searches, SDLT, survey costs - Removal and transport: physically moving household goods, storage - Travel and subsistence: the employee and family's travel to the new location; temporary living costs during the move - Costs of domestic goods: replacing domestic items that cannot be economically transported - Bridging loan interest: interest costs on a bridging loan taken to buy the new home before the old one sells **Not qualifying** - House price difference (moving from a cheaper to a more expensive area) - Costs incurred more than 5 years after the relocation date that makes the employee eligible **Amount above £8,000** Any employer payments above £8,000 are treated as earnings: taxable as income and subject to Class 1 NI (both employer and employee). **Condition: eligible employee** The employee must be changing their place of work (either a new job with the same employer or a new employer) and the new home must be within a reasonable commuting distance of the new workplace. The old home must have been too far from the new workplace for the employee to commute.

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