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In the UK the government has rules on relocation.

https://www.gov.uk/expenses-and-benefits-relocation/what-to-report-and-pay

It states that I do not have to report qualifying costs up to 8k. I have been offered a payment for relocation rather than the benefit.

How do I go about declaring the costs for relocation such that I don't pay tax and national insurance on the relocation payment as such this would reduce any payment by a very large amount?

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The page you're referring to is about the process for employers, rather than employees.

From an employer's perspective, as long as the money they paid out was for qualifying costs up to 8k, they don't have to report anything to HMRC. But most employers would want to be able to prove that it was for qualifying costs in case they got audited.

So this is really a question between you and your employer. You should talk to them as soon as possible to ask if they will pay qualifying costs tax-free, and ask them what evidence they will want to enable them to do that. And in the meantime make sure you have a clear record of those costs and keep receipts.

Ideally they would be happy to pay anything qualifying tax-free and the rest of the payment as a taxable benefit. But it may be that they don't actually want the administrative hassle, in which case you could be out of luck.

  • So basically, because it's a cash payment then I have to pay full PAYE on the payment no matter what costs I incur or can prove to HMRC – JamesD Oct 18 '18 at 11:20
  • I think so - I can't find anything that supports you being able to claim tax relief directly if your employer pays it through PAYE. See e.g. accountingweb.co.uk/any-answers/… for some discussion. – Ganesh Sittampalam Oct 18 '18 at 11:49
  • I just found this out suggests that you can directly claim relief up to the amount paid in cash via a self assessment...google.co.uk/url?sa=t&source=web&rct=j&url=https://… guess I'm going to have to contact an accountant or HMRC directly. – JamesD Oct 18 '18 at 18:43

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