Employment Benefits – Living & Relocation Expenses

Employment Benefits

In this week’s blog, we’re reviewing two commonly inquired about benefits/benefits-in-kind that come with certain rules that may reduce the tax liability upon receipt:
  • Employee living on business premises
  • Removal and relocation expenses
As we have established over the previous weeks, there are a number of benefits that an employee can receive that are not subject to tax or can be received tax efficiently. Let's review the specifics in relation to these two types:  

Benefit – Employee living on business premises

 An employer may require an employee to live on the business premises, this is not a taxable benefit-in-kind.  It is important to note that; 
  • The employee cannot be a director 
  • The accommodation must be provided by the employer and on the employer’s, business premises
  • The employee must live on the premises in order to perform their duties
  • The tax exemption applies if
    • The employee is required to be on call outside normal hours
    • The employee is frequently called out 
    • The accommodation was provided so that the employee could access work quickly 
Qualifying examples include care staff in residential or respite centres, prison governors and chaplains, caretakers living on the premises, and student nurses living on a hospital campus.   

Benefit – Removal and relocation expenses

An employer may require an employee to move house in order for them to carry out their employment duties, these removal and relocation expenses are not taxable if it costs the employee money to move to a new employment location or to take up their employment.  It is important to note that;
  • The expenses will be tax-free if;
    • There are actual removal and relocation expenses
    • The expenses are for a reasonable amount  
    • The payment of the expenses is properly controlled
    • Moving house is necessary
  • Only expenses that are a direct result of the move can be repaid tax-free. Including;
    • Auctioneer’s fees, solicitor’s fees and stamp duty arising from moving house
    • Removal of furniture and other items
    • Storage charges
    • Insurance of furniture and other items in transit or in storage
    • Cleaning of stored furniture
    • Travelling expenses on removal
  • In certain circumstances, subsistence expenses can be paid to the employee
    • A temporary subsistence allowance can be paid for a maximum of 10 nights at a rate not exceeding current civil service rates whilst the employee is looking for accommodation in the new location. Vouched receipts are not required. 
    • Rent may be paid for temporary accommodation for a maximum period of three months. Vouched receipts are required. Rent for temporary accommodation and the allowance for temporary subsistence cannot be paid at the same time. 
Expenses that are not tax-free are any part of the capital cost of buying or building a house and any bridging loan interest, or loans to finance the employee buying or building a house.  Disturbance money is treated as salary and should be taxed.  All records relating to removal and relocation expenses paid should be kept for six years.