COMPLIANCE
John Harling, principal employment taxes consultant, PSTAX, discusses some key considerations when employing individuals who are relocating to the UK I n recent years, we’ve seen an increase in requests for advice regarding the tax / National Insurance contributions (NICs) rules for employees relocating l a change of the duties of an existing employment with the employer l a change of the location where the existing employment duties are performed. Tax and NI implications for employees relocating from abroad
employee no later than the next 5 April following the year ending on 5 April in which the relocation event occurred. However, HR Majesty’s and Customs’ (HMRC’s) approval may be given in some circumstances to extend this, e.g., where there’s difficulty in selling the previous main residence despite reasonable efforts to do so. Expenses qualifying for exemption come within the following headings. For the sake of brevity, we haven’t included all the types of expenses that fall within each category and employers are advised to check the relevant detailed HMRC guidance: l the disposal or intended disposal of old residence l acquisition or intended acquisition of new residence l transporting belongings l travelling and subsistence l domestic goods for the new residence l bridging loans. Given that these rules and the £8,000 limit for tax / NIC purposes haven’t changed for so long, it’s often argued
to the UK, where there are domestic shortages in the home labour market, e.g., social workers, doctors and others. Employers are often happy to meet some of the costs involved as an incentive to recruitment, but there’s sometimes uncertainty about which expenses qualify for any tax and NI exemptions. Basic relocation tax / NIC rules For almost 30 years, there’s been a statutory limit of £8,000 regarding specified qualifying relocation expenses met by the employer, provided certain conditions are met. These apply equally for staff relocating from inside and outside the UK. Briefly, the exemption applies where an employee changes their main residence because of one of the following employment events: l starting a new employment with the employer
In each of the cases above, the exemption will only apply where: (a) it’s not practical for the employee to commute from their previous main residence to their new main workplace, and (b) their new main residence is within reasonable travelling distance of their new main workplace. To qualify for expenses to be paid free of tax / NICs within the limit, it’s not necessary for the employee to have sold their previous main residence (where owned), or for them to be the owner-occupier of the new main residence. However, they must change their main residence. Employees relocating to the UK from overseas permanently are likely to meet these conditions, but care should still be taken to ensure that the criteria set out above apply. To qualify for reimbursement, the expenses must be incurred by the
| Professional in Payroll, Pensions and Reward | October 2022 | Issue 84 20
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