You’ve landed a brilliant new job, but it means uprooting your entire life and moving to the other end of the country. The removal vans aren’t cheap…the solicitor’s fees are eye watering…and don’t even get me started on stamp duty.
The good news (apart from the new job)? There’s a relocation allowance that could save you thousands!
Your new employer can pay up to £8,000 of your moving costs completely tax free under the UK relocation allowance scheme. Yes, really. Here’s how it works and what qualifies.
How the relocation allowance actually works
The relocation allowance lets employers cover (or reimburse) genuine moving costs without you having to pay Income Tax or National Insurance on them. Up to £8,000, that is. Go over that and you’ll need to report the difference and pay tax on it.
One thing to note: this only works if your employer pays the supplier directly or reimburses you against receipts. You can’t just claim a deduction on your Self Assessment and hope for the best.
Who qualifies for the relocation allowance?
Not everyone, obviously. This is HMRC we’re talking about. You’ll need to tick these boxes:
- You’re a new employee moving to start a job, or an existing employee changing your work location within the same organisation.
- Your new home is reasonably close to the new workplace and your old home wasn’t. In plain English: your commute needs to be genuinely better.
- The costs are paid before the end of the tax year after the one you started. So if you begin in March 2025, everything needs to be sorted by 5th April 2026. Start in May 2026? You’ve got until April 2028.
There are some circumstances where that deadline can be extended too. If your child’s in the middle of GCSEs or A Levels, or you’re having trouble selling your old house, HMRC can be surprisingly reasonable. I know, I’m as shocked as you are!
What can you actually claim?
This is where it gets good. The relocation allowance covers more than you’d think:
Selling your old place: Legal fees, estate agent fees, rent and insurance if it sits empty for a while. Weirdly, council tax during an empty period doesn’t count. Don’t ask me why.
Buying your new place: Solicitors, surveys, land registry fees, stamp duty, connecting utilities. Basically most of the annoying costs that come with buying a house.
Moving your stuff: Packing, unpacking, transport, storage. All the things that make moving day feel like a military operation.
Travel and accommodation: Visits to check out the new area, travel between old and new locations during the transition, even hotel stays while you’re between properties.
Domestic goods: If your old curtains don’t fit the new windows or your cooker won’t squeeze into the new kitchen, replacements can qualify.
Bridging loans: The interest on bridging loans can be included too, though there are extra hoops to jump through.
School continuity: If your child needs to stay behind to finish exams, travel and accommodation costs for that can be covered.
What about international moves?
Moving from overseas? There’s actually extra relief available for travel costs on top of the £8,000 relocation allowance. It only covers travel, mind, but it’s a separate pot entirely. Family members can typically claim up to two inward and two outward journeys per person per tax year.
The bottom line
If you’re relocating for work, don’t leave money on the table. Ask your employer about the relocation allowance before you start loading boxes. Eight grand tax free isn’t something to turn your nose up at, so make sure you reap the benefits. It doesn’t come round very often!
Relocating for work and want to make sure you’re getting every penny you’re entitled to? Drop us an email – we’ll help you work out what qualifies and we’ll keep HMRC happy. |
