Assignment Relocation Expenses

Up to £8,000 of employer paid or reimbursed relocation expenses are exempt from UK tax when an individual takes up assignment (relevant expenses incurred before the start of the assignment must also be taken into account against the limit). If return relocation is guaranteed under the UK assignment conditions, up to a further £8,000 of expenses and benefits may be received tax-free when returning home. If no arrangements for return relocation are included in assignment terms, any relocation expense will normally be related to the new home country role rather than the UK one and so will be outside the scope of the UK tax charge on employment income (unless the new role will involve in ongoing UK duties).

Any relocation cash allowance paid by the employer is taxable, and subject to PAYE deduction, unless the employer has agreed in advance with HMRC that the amount falls within tax-free limits. The employee cannot claim tax relief for any relocation expenses that have been borne personally. Most types of relocation expenditure qualify for exemption (subject to the £8,000 limit). Exemptions include UK storage costs, the cost of temporary accommodation for family on arrival in the UK, and (if the home is retained) the cost of any duplicate items (such as kitchenware or electrical appliances) in the UK.

Expenses above the limit will need to be reported to HMRC, whether they are paid in the UK or abroad.