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Relocation costs

 

If the company pays for an employee to move house, the company or the employee might also have to pay taxes or National Insurance.

First, figure out if a moving cost is "qualifying" or "non-qualifying".

Qualifying moving costs3:37

 

Qualifying moving costs include buying or selling the house, moving, buying things for the house, and bridging loans.

If the moving costs are "qualifying" and less than the £8,000 limit, there's no tax or National Insurance to pay.

Watch our video on adding "Qualifying moving costs" expenses.

Read more from HMRC: "What you do not have to report"


 

If it turns out that the moving expense isn't "qualifying", use one of the following three options.

Company arranged benefit1:00

 

If the company chooses the supplier, and then pays the supplier directly, then:

  1. Add a "Benefit in kind" expense.
  2. Keep "Arranged by" as: "Company"

This way the benefit is taxed by Income Tax (PAYE) and Class 1A National Insurance correctly.


Employee arranged benefit0:53

 

If the employee chooses the supplier, but then the company pays the supplier directly, then:

  1. Add a "Benefit in kind" expense.
  2. Set "Arranged by": "Employee"

This way the benefit is taxed by National Insurance correctly.


 

If the employee paid the cost of a personal expense out of their own pocket, and now the company's paying them back, then:

  1. Add a "Once only taxable benefit" expense.

This way the expense is taxed by both Income Tax (PAYE) and National Insurance.


  Updated: Mon, Jul 4, 2022. Keywords: J. Headings: `What're "qualifying" and "non-qualifying" costs?`, `How do I know if an expense is "qualifying" or "non-qualifying"?`, `Where do I put qualifying relocation expenses payments and benefits?`, `Where do non-qualifying benefits and expenses go?`, `How do I handle non-qualifying relocation expenses?`, `How do I add "Expenses and benefits: relocation costs"?`
 

Qualifying moving costs3:37

"How do I enter "qualifying" moving costs?" 

 

HMRC sometimes just calls this "qualifying costs". Here's an example, where the "qualifying" moving cost is £10,500. 

  • Because it's over the £8,000 limit, we'll first create a standard "Expense" for the first £8,000. 
  • After, we'll create a "Benefit in kind" expense for the remaining £2,500. 
  • However, keep in mind, if your cost's less than the £8,000 limit, you'll only need to do the first step. 

"Ok, so how do I create the standard expense for the part under £8,000?" 

To create the standard expense part for up to £8,000: 

  1. Click through to: > Menu > Expense claim 
  2. Choose the employee who's moving. 
  3. In this example it's Sonia. 
  4. Choose: Expense 
  5. Enter £8,000 and click: Next 
  6. Choose an option from the "Qualifying costs under £8,000", then click: Next 
  7. You can attach an image, like a receipt, but we're just going to click Skip image for now. 
  8. Once you're happy with it, click: Save 
  9. Your new expense will now be added to Sonia's paystub. 

To see this expense: 

  1. Go to: Amount 
  2. Then click the See on paystub button. 
  3. Now you'll see a new expense added under "Post-tax benefits and reimbursements". 
  4. And that's how you know the first part of the expense was created successfully! 

"How do I then create the remaining expense for the "qualifying costs" over £8,000?" 

To create the second expense part for the remaining £2,500: 

  1. Click through to: > Menu > Expense claim 
  2. Choose the employee who's moving. 
  3. In this example it's Sonia. 
  4. Scroll down and choose "Benefit in kind". 
  5. Enter £2,500 
  6. Leave "Arranged by" as "Company", and click: Next 
  7. Now you can write some notes about this expense if you'd like. 
  8. When you're finished, click: Next 
  9. You can attach an image, like a receipt, but we're just going to click Skip image for now. 
  10. Once you're happy with it, click: Save 
  11. Your new expense will now be added to Sonia's paystub. 

To see this second expense: 

  1. Go to Amount, and click the See on paystub button. 
  2. Now you'll see there's a new expense added under "Benefits in kind ... company arranged". 
  3. And that's how you know the second part of the expense was created successfully! 

And that's it! That's all you need to know for adding "qualifying" moving costs! 

Updated: Sat, Feb 5, 2022. Keywords: J. Headings: `Where do I add "qualifying costs" over £8,000?`

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