Introduction

A large number of employers pay for the cost of relocation of their employees. Particularly this happens when the employer moves an employee from one location to another in order to perform his duties in that new location or where an employer takes on a new employee who has to relocate to take up his duties.

There is a broad-ranging exemption in place. However it only applies to certain types of expenditure in certain circumstances and is subject to an overall cap.

The legislation for the exemption is at ITEPA 2003, s 271 onwards. HMRC’s guidance is at EIM03100 onwards.

Relocation

The exemption from tax applies to the first £8,000 of removal expenses where the reason for the relocation is that the employee is changing employer, taking up a new role within an organisation or changing the place where he is normally expected to carry out his duties. The exemption only applies where either the employer, or a third party, pays for the removal expenses or reimburses the costs borne by the employee. Where the