Loading...
Loading...
Complete guide to HMRC tax-free relocation benefits. Learn how to claim your £8,000 allowance and understand qualifying expenses.
The Relocation Income Tax Allowance (also called a "Relocation Deduction" under HMRC rules) is a benefit that allows employees to receive certain relocation expenses from their employer on a tax-free basis, up to a limit of £8,000 per relocation.
If your employer covers relocation expenses that qualify, you don't pay income tax on those benefits—up to £8,000 total. Anything above £8,000 is taxable.
Important: The £8,000 limit is per relocation, not per year. This means:
These expenses are considered qualifying and covered by the allowance:
Keep detailed receipts and invoices for all relocation expenses. HMRC may request documentation to verify your claims, especially for large or unusual expenses.
These expenses do NOT qualify for the allowance and are taxed:
Many people try to claim furniture and home decoration as relocation expenses. These don't qualify and HMRC will reject them. Stick to direct relocation-related costs only.
Inform HR/Finance that you're relocating and request relocation expense coverage under the HMRC allowance.
Gather invoices, receipts, and quotes for all relocation expenses. Keep copies of everything.
Provide your employer with itemized expenses. They'll cover up to £8,000 tax-free.
If expenses exceed £8,000, declare the excess on your Self Assessment tax return.
Retain all documentation for 6 years in case of HMRC enquiries or audits.
Quick calculator to see how much tax-free allowance you have remaining:
Allowance Limit
£8,000
Tax-Free Amount
—
Taxable Amount
—
* Assuming 20% income tax rate. Your actual tax will depend on your tax band (20%, 40%, or 45%).
No, the relocation income tax allowance is only available to employees. Self-employed individuals cannot claim this benefit. However, you may be able to claim relocation expenses as business deductions through your tax return.
You can claim the first £8,000 tax-free. Any amount above £8,000 is considered taxable income and must be reported on your tax return. You'll owe income tax on the excess (20%, 40%, or 45% depending on your tax bracket).
Yes, the allowance applies to both domestic (within the UK) and international relocations. The rules are the same regardless of whether you're moving to another UK city or another country.
Yes! The £8,000 allowance applies to each relocation separately. If you relocate again in the future, you get a new £8,000 allowance for that relocation. Unused allowance from one relocation does not carry over.
There's no strict time limit, but it's best to claim within the same tax year as the relocation. If you're self-assessing, you must include it in your tax return for the relevant tax year. HMRC generally allows 4 years to make amendments.
The allowance is available if you're working in the UK, regardless of where your employer is based. However, if you're working abroad, you'll need to discuss the tax treatment with your employer and accountant, as different rules may apply.
Our relocation experts can help you understand your allowance and find services to keep your costs down.