P11D Section J - Qualifying Relocation Expenses Payments and Benefits

As an employer, if you cover any of the costs associated with an employee's relocation, then you have particular tax and National Insurance obligations plus reporting responsibilities.

The relocation costs can include the following:

• buying or selling a home
• moving
• purchasing certain things for a new home
• bridging loans
• other relocation expenses (these are counted as ‘non-qualifying’ costs and have different rules)

Certain expenses related to relocation, up to £8,000, are not liable for tax or National Insurance deductions. These expenses are known as ‘qualifying’ costs and could include the following:

• the costs of buying or selling a home
  • e.g. legal fees, estate agent charges
• moving costs
  • e.g. removal costs and cost of temporary accommodation
• purchasing certain things for a new home
• bridging loans

For a bridging loan to count as a qualifying cost:

• your employee (or members of their family) must sell their old home and buy a new one
• it must be needed to bridge the gap between buying the new house and getting the money from the sale of the old one
• it must be used only to buy the new house or pay off loans relating to the old home
• it cannot be for more than the market value of the old home at the time the new home is bought

💡 The above examples are only qualifying costs when:

• a new employee is moving area to start a job with you
• an existing employee is changing their place of work within your organisation
• the employee’s new home is reasonably close to the workplace, and their old home is not

• the costs must be paid before the end of the tax year following the one in which the employee started their job

For qualifying costs over £8,000, you may have to report and pay tax and National Insurance.