Expenses and benefits: relocation costs
What you do not have to report
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
- moving costs
- buying certain things for a new home
- bridging loans
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 employee’s new home is reasonably close to the workplace and their old home is not
- the costs are paid before the end of the tax year that’s after the one in which the employee started their job
For qualifying costs over £8,000, you may have to report and pay tax and National Insurance.
Bridging loans
For a bridging loan to count as a qualifying cost:
- your employee (or members of their family) must sell their old home and buy a new one
- it must be needed to bridge the gap between buying the new house and getting the money from their sale of the old one
- it must be used only to buy the new house or pay off loans relating to the old home
- it cannot be for more than the market value of the old home at the time the new home is bought