Tax relief on my relocation to the UK

[lonuk]

Good afternoon,

Hopefully, a simple question regarding tax return in the UK:

I moved to London from abroad to work as a full-time employee for a UK company. I paid all my relocation expenses myself.

According to HRMC, some relocation costs up are exempt from paying tax and National Insurance. Can I claim tax relief on them myself by completing the P87 tax relief form (or a Self Assessment tax return form)? Or is it my employer who should deal with this?

Thank you in advance.

[LozaACCS]

You must claim the relief, form P87 can be used if the amount is does not exceed £2,500, if it does you need to register for SA and claim the amount through the tax return.

[lonuk]

Dear Loza,

Many thanks for your reply!

Sorry, I should have mentioned that I moved to the UK to start a new employment (as opposed to a short-term relocation by a company). Is it still possible to get a tax relief in that case myself using P87? It looks like no... At the same time, my employer could claim the same relocation costs tax free (up to £8K) if he wanted to cover them. Is that correct?

Thanks again for your wonderful help.

[GlobalTaxAdviser]

I don't think you can claim under Section 287 ITEPA 2003 which says the employer must pay for expenses and not the employee

If your employer pays for your relocation expenses then it is not taxable and your employer will get a tax deduction in their accounts and this is assuming that your employer recruited you directly from overseas and you meet the other criteria.

If you moved here and found a job then no you cannot claim relocation expenses.

I cannot see anything in the legislation about paying the employee paying relocation expenses though I would be interested if there was something

Kind Regards

Sash

[lonuk]

If your employer pays for your relocation expenses then it is not taxable and your employer will get a tax deduction in their accounts and this is assuming that your employer recruited you directly from overseas and you meet the other criteria.

Thank you Sash. Yes, my employer recruited me directly from overseas - the job offer was the main reason why I moved to the UK. I do meet all the other criteria. And that's what baffles me: if my employer payed for my relocation expenses, then it would not be taxable; however, if I pay exactly the same relocation costs myself, they are taxed at the usual rate.

How can the same amount of money spent for the same work-related purposes be taxable or not depending on who covers them? Looks a bit illogical. Though apparently, this is how it works in this case.

Most other tax relief rules seem to be effective regardless of who covers the costs (for example, if I pay for a business trip myself, I can claim it tax free - and if my employer pays for my business trip, he can claim it tax free).

Thank you!

[GlobalTaxAdviser]

Yes I totally agree the legislation seems unfair and if you are reimbursed the expenses then they are counted as earnings an you will pay Tax and NIC class 1. The legislation is a bit pointless as its more cumbersome for employers to pay for relocation costs directly then the employee.

In hindsight it may have been better to negotiate a relocation package which is common when recruiting from overseas so the the employer pays who would then get a tax deduction the accounts as well. Perhaps you can speak to your employer about extra costs you incurred and come to a compromise

Were your relocation costs significant ?

Kind Regards

Sash
www.business-at.com

[lonuk]

Yes I totally agree the legislation seems unfair and if you are reimbursed the expenses then they are counted as earnings an you will pay Tax and NIC class 1. The legislation is a bit pointless as its more cumbersome for employers to pay for relocation costs directly then the employee.

Many thanks, at least it's nice to have a confirmation.

In hindsight it may have been better to negotiate a relocation package which is common when recruiting from overseas so the the employer pays who would then get a tax deduction the accounts as well. Perhaps you can speak to your employer about extra costs you incurred and come to a compromise

Were your relocation costs significant ?

You are totally right, and actually I negotiated one. But upon arrival it turned out my package had been offered by wrong people (Human Resources and my line manager rather than the main director of the company who is actually responsible for all the money). So nothing was reimbursed as a result. The costs were quite high (I relocated from outside of Europe) so I thought it would be nice to get some tax relief. But now I see that it is not possible. So I'll have to live with it - don't want to spend another fortune on going back, lol

Anyway, I'd like to thank you again for your time and such a great help. This really adds to my positive experience in the UK

[camden]

Hi, sorry to butt in.

Was wondering whether the OP was looking at s373 deduction. No doubt he/she will need to claim through SA, but my amateurish read of the legislation appears to support a view that an employer need not be involved in order to be eligible for the s373 exemption for IT (not NIC) purposes. Am I wrong?

John