P11d Qualifying Relocation Expenses Section J covers costs exceeding £8,000 of all non-qualifying relocation costs.
P11d Relocation Expenses
An employer can contribute up to £8,000 towards qualifying moving expenses and benefits for an employee tax-free.
Anything above this limit becomes taxable and needs to be included on a P11d form.
P11d relocation expenses includes costs such as:
- those involved with buying or selling a home such as legal or agents fees;
- moving costs;
- buying certain things for a new home;
- bridging loans (see below);
These relocation expenses are only qualifying costs, to be included in the £8,000 tax free amount, 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 costs are paid before the end of the tax year after the one in which the move took place;
- the employee’s new home is reasonably close to the workplace and their old home isn’t.
For a bridging loan to count as a P11d qualifying expense:
- 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 their 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 can’t be for more than the market value of the old home at the time the new home is bought.
How to Calculate P11d Qualifying Relocation Expenses
HMRC provides a useful worksheet on which to work out the P11d value of relocation expenses.
Non Qualifying Expenses
Non-qualifying expenses are ones which do not meet the criteria above but have been covered by the employer.
These costs need to be reported on a P11d form but disclosed in section N.