Relocation expenses

Time Limit for Submitting Relocation Expenses Claim

The time limits to claim tax relief associated with the reimbursement relocation costs are determined by HMRC and as per their guidelines; the reimbursement of the costs must be made within one year of the appointment. Because the costs must be incurred, and a claim for reimbursements made, prior to the end of the tax year, following the commencement of your new appointment.

Reporting and Payment of Relocation Expenses

For qualifying costs up to £8,000, you don't have to report or pay anything, however anything above it, you need to report to HMRC for each employee you have provided with expenses or benefits and pay the taxes and national insurance as applicable.

For qualifying costs above £8,000, you would require to report to HMRC on Form P11D and pay Class 1A National Insurance on the amount over and above £8,000 by submitting Form P11D (b), which is a way to inform HMRC about all the expenses and benefits which you have provided to your employee(s) in that particular tax year.

Apart from the expense and benefits details, you would also need to submit Form P11D (b) if:

• If you have submitted Form P11D forms before
• If you have paid for the employees' benefits and expenses through your payroll In this case, you can inform HMRC online that you are collecting tax on benefits and expenses through your payroll, instead of using form P11D. To avail this, you have to add amount equivalent to their expenses and benefits to their pay and then tax them through the payroll. However, for the non-payrolled benefits, you would need to send a P11D form.
• If you have been asked by HMRC to submit the same. HMRC generally send you the form or they will ask you to submit the same via an email.

If you don't owe any National Insurance to HMRC i.e. you haven't paid any expenses or benefits to any employees and yet have got a reminder from HMRC, you can inform HMRC that you don't owe Class 1A National Insurance by either signing in with the government gateway or by filling up the declaration form, in case you are an agent and your client has not paid any expenses in that tax year either directly to any employees or through their payroll.

However, in case you have to pay Class 1A National Insurance, then you should pay the same by:

• 19th July, if the payment is by post &
• 22nd July, if the payment is through an electronic medium.

While submitting Form P11D or Form P11D (b), you need to exercise adequate precaution and fill in the details correctly because in case there is an error, you need to submit it again with all the benefits and expenses for that particular tax year. In case, you are making corrections for a different year, then you need to mention that the amendment is for the different tax year to the one printed on the form and the tax year you are making the amendment for.

For example, if you have sent a P11D form showing a car benefit of £2,100 and a medical benefit of £300,instead of £500. In this case, you have to re-send the P11D form showing medical bill of £500 as well as car benefit of £2,100.

In case, if you have sent a P11D(b) form showing you need to pay £10,000 of Class 1A National Insurance instead of £15,000, then you need to re-send the P11D(b) form showing the amount £15,000.

What makes the correction process more tedious is that you have to submit the corrected forms on paper, even if you have submitted it online, on the below address:

• P11D Support Team
• BP1102
• HM Revenue & Customs
• Department 1250
• Outside UK:
• Newcastle-upon-Tyne
• NE98 1ZZ

Accommodation

You don't need to pay anything or to report to HMRC on the cost of certain types of accommodation like if it:

• Domestic or Personal Accommodation: In case you are a sole trader or if you are providing your house to your employee who is also your close relative and happen to work in your business. However, if you are a company or in a partnership or providing your personal accommodation to someone who is not your family member ( close relative), cost of accommodation will not be exempt and you have to report it to HMRC and pay tax and national insurance, as and if applicable.
• If it is Provided by a Local Council: In case accommodation is provided by the local council on the same terms that it provides to the non-employees, the cost of accommodation will be exempt and you don't have to report to or pay anything to HMRC.
• If it is indispensable: If your employees cannot function without it, i.e. agricultural workers living on the farms. In such case, cost of accommodation is exempt and you don't have to report to or pay anything to HMRC. However, in case you are providing the accommodation to company directors, they should be working fulltime and holding less than 5% of the shares.
• If it is for security reasons: If you have provided the accommodation to your employee(s) to protect them from any kind of threat or danger, then the cost of accommodation is exempted.

However, if the reasons for the accommodation or type of accommodation is not exempted, then you have to pay tax and national insurance on the cost of accommodation as well as on:

• Council Tax
• Water and Sewage Charges
• Heating, Lightning and Cleaning
• Repair, Maintenance and Decoration
• Furniture for daily use
• Staff for housekeeping staff like gardeners, cleaners etc.

Food and Groceries:

If you are providing food and groceries with no resale value to your employees or directors, then you have to report it to HMRC on P11D form and pay Class 1 National Insurance on the cost.

Shuttle Service/Work Bus Service

In case you are providing works bus service to your employees, then you don't have to report the cost of providing a bus to bring your employees to work. However, the service must be for journeys between work and home, from one workplace to another or from workplace to local amenities (should not be more than 10 km). The works bus service should be for all employees, irrespective of whether they avail it or not and it should be carrying 12 or more passengers or more than 9 passengers in case of minibus.

Employee Liabilities and Indemnity Insurance

For any expense made by you on legal count for any of your employee, you must report its cost on form P11(D) to HMRC. However, you don't have to deduct or pay any tax or National Insurance on it.

Apart from the above mentioned expenses/benefits, there are various expenses and benefits for which you need to check if they need to be reported to HMRC and for any tax and National Insurance obligations, like:

• Car Parking Charges
• Clothing
• Christmas Bonus
• Club Membership
• Credit and Debit Cards
• Home Phones
• Mobile Phones
• Personal Bills
  • Trivial Benefits

Recovery on Termination or Resignation of Employment:

In case there is significant cost involved in relocating an employee, then in the event of him resigning from his post, he might be required to repay a percentage of the money spent on him during his relocation. The terms and conditions for the same are mentioned in his Letter of Offer.