Relocation Assistance Scheme: Administrative guidance notes

This note supplements the Relocation Assistance Scheme and should be read in conjunction with those notes. It is intended for use by administrative staff in Colleges and Professional Services.

How much assistance will a new member of staff be eligible for?

The standard scheme provides relocation assistance for actual costs incurred of up to:

Length of contract Amount of relocation assistance
Fixed term of up to and including one year  not eligible 
Fixed term of more than one year and up to and including two years  5% of annual salary
Fixed term of more than two years and up to and including three years  7.5% of annual salary
Open-ended or for fixed term of more than three years  10% of annual salary or £8,000 (whichever is the lower)*

* exceptionally, the Director of HR may approve a higher figure at the request of the College Dean/Head of Service. This must be approved in writing at the time the appointment is made.

HM Revenue and Customs (HMRC) regulations define:

  • what expenses can and cannot be claimed;
  • the requirement for claims to be supported by receipts, which must be retained;
  • the maximum sum that can be claimed tax free (currently £8,000);
  • the time limit for reimbursing the expenditure incurred - ie the end of the tax year following that in which the new employment commenced. (For example, new employee A commences employment on 1 July 2013: they must submit their final claim by 5 April 2015. Similarly, new employee B, who commenced employment on 1 March 2014, must submit their final claim by 5 April 2015.) Exceptionally, the Director of HR may approve the extension of the period for submitting claims at the request of the College Dean/Head of Service. This must be approved in writing. Where approval is given, payments will be taxable and should be submitted to HR Services for payment rather than through Online Expenses – see below.

HMRC guidance on relocation expenses and benefits can be found on the HMRC webpages.

What is covered under the Scheme?

The University’s rules on permissible expenses mirror the HMRC regulations. In summary, if an expense is permissible under the HMRC regulations, then it is a permissible use of the new employee’s relocation allowance.

Staff claiming relocation assistance must move to an address that is within 30 miles and 45 minutes commuting time of their University work location. Exceptionally, the Director of HR may waive this requirement at the request of the College Dean/Head of Service. This must be approved in writing at the time the appointment is made.  

Temporary Accommodation

New appointees may ask whether the University will contribute towards the costs of temporary accommodation near their new place of work (i.e. after they have started their new job but before they have sold their current home).

"Temporary living accommodation" is an allowable expense (against the tax-free relocation allowance) within the HMRC’s regulations only where the employee intends to move to permanent accommodation to complete the relocation and is actively looking for a new permanent residence.

Any reimbursement of temporary accommodation expenses will count against the tax-free relocation assistance specified in the letter of appointment.

See the guidance below on the HMRC reporting requirements for cases where the University has paid the supplier direct for temporary living accommodation (rather than reimbursing the employee).

Application to couples

HM Revenue & Customs rules restrict the total tax-free and NI-free amount allowable per house move to £8,000. Consequently, this can affect a couple (whether married, in a civil partnership or cohabiting) who are both appointed to positions at the University. If they were both paid relocation expenses when moving to the same property which, totalled together, exceeded £8,000, they would incur a tax liability.

To avoid this, where a couple are both appointed to positions at the University, it has been decided that only one of partners will be entitled to relocation assistance under this scheme. Where this applies, the new appointees should confirm with HR Services which partner is covered by this scheme: HR Services will confirm with the two employing units which new employee will qualify for assistance, what the level of assistance will be and which unit(s) will fund this.

Other questions

HR Services maintain an FAQ which includes guidance on items of expenditure which can be claimed from the allowance. 

Use of University's preferred supplier

Following discussions with Procurement, we have decided to withdraw the option for new employees to ask the University to pay Hackworthy and Sons direct if they choose to use the University’s preferred supplier for their relocation. Hackworthy and Sons will continue to offer a 10% discount for University of Exeter staff on domestic removals, but they will have to settle this direct with the company and reclaim the expenditure throug the Relocation Assistance Scheme.

How does the member of staff make the claim?

Whenever possible the new member of staff should arrange for the supplier to present an invoice to the University and the College/Service will make payment direct to the supplier via Aptos using the appropriate account code with subjective code L32 for relocation costs pertaining to that College/Service. Invoices should state for whom the service has been provided but be for the account of the University and be addressed to it.

When the individual makes a claim (or claims) for reimbursement it should be made using the University’s online expense system.

The claim must be approved by the College/Service and processed in the usual manner for expense claims. (See weblink for further details).

To comply with the University’s Financial Regulations, Expenses Policy and HMRC regulations, all claims must be supported by receipts, which clearly detail the supplier, the nature of the expenditure, the date of the supply and the amount incurred.

What are the responsibilities of the College/Service?

It is the responsibility of the College/Service to monitor compliance with University requirements and HMRC regulations.

In particular, Colleges/Services should use the monthly Aptos reports to keep a record of relocation expenses claimed to date (noting that these may cover more than one financial year) to ensure that:

  • the new employee does not claim more than the maximum figure referred to in the letter of appointment;
  • the new employee does not claim for expenditure which is not permissible under HMRC regulations;
  • the new employee does not claim for expenditure after the tax free period under HMRC regulations expires (see above);
  • where a relocation allowance above £8,000 has been approved by the Director of HR, claims are administered as shown below.

Finance staff in Colleges and Professional Services should also ensure that new appointments and managers are aware of the appropriate finance code to use for relocation so that expenditure is correctly allocated and monitored.

Tax issues

A tax liability (ie income tax for the employee and National Insurance (NI) contributions for both employee and the University) will arise if:

  • a payment is made for expenditure which is not permissible under HMRC regulations;
  • a payment is made for expenditure claimed after the tax free period regulations expires (see above);
  • the relocation allowance exceeds £8,000.

If there is a delay in the University reporting these non-exempt payments to HMRC they may become chargeable in full to the College/Service as HMRC would recover them from the employer. They may also charge interest and penalties for non-compliance.

HR Services will write to Colleges/Services at the end of each tax year asking them to notify HR Services if there are any new employees:

  • who have claimed more than £8,000 (if they have been paid through online expenses);
  • who have submitted claims after the expiry of the tax free period (if they have been paid through online expenses);
  • payments for temporary accommodation which have been paid direct to the supplier.

Colleges/Services should send a list of staff, together with the amount paid, to the Employee Services Team Leader in HR Services (Email payandbenefits@exeter.ac.uk) at the earliest opportunity in order that the information can be entered onto a P11D for each member of staff.

As an alternative to paying taxable claims through online expenses and then reporting these to HMRC on a P11D, any relocation expenses which are subject to tax can be be sent direct to the Employee Services Team Leader for processing through the Payroll, where they will be taxed at source. (Email payandbenefits@exeter.ac.uk)

Temporary Accommodation

If the University pays a supplier direct for temporary living accommodation (for example, the payment is made direct to a hotel or to Campus Services if the employee has stayed in University accommodation), and the relocation satisfies all of HM Revenue and Customs qualifying conditions, it will still be exempt from tax but the information must be reported to HMRC on a P11D.

The expenditure incurred by the University will count against the new employee’s total relocation allowance.

If the relocation does not meet the qualifying conditions, it becomes a taxable benefit and again must be reported to HMRC on a P11D. The value reported to HMRC is the cost to the University of providing the benefit - ie the gross payment made to the supplier. These details must be provided to the Employee Services Team Leader in Human Resources by your College/Service no later than the end of the tax year in which the expenditure was incurred.

Colleges/Services are responsible for their own element of the relocation budget and for compliance with the scheme. If expenses other than those approved by HMRC were to be reimbursed then the amount involved could be subject to tax and both employee and employer’s National Insurance (NI) contributions. These would all be chargeable to the College/Service as HMRC would recover them from the employer. They may also charge interest and penalties for non-compliance.

Colleges/Services are required to send a list of staff who have received relocation expenses (including any payments for temporary accommodation which have been paid direct to the supplier) in excess of £8000 within each tax year together with the amount paid to the Pay & Benefits Team Leader in Human Resources (Email payandbenefits@exeter.ac.uk) by 6 April each year in order that the information can be entered onto a P11D for that member of staff.

If the University pays direct for temporary living accommodation, for example in a hotel, and the relocation satisfies all of HM Revenue and Customs qualifying conditions, it will still be exempt from tax but the information must be reported to HM Revenue and Customs on a P11D.

If the relocation does not meet the qualifying conditions, it becomes a taxable benefit and again must be reported to HM Revenue and Customs on a P11D.

The value reported to HMRC is the cost to the University of providing the benefit - ie the gross payment made to the supplier.

These details must be provided to the Employee Services Team Leader in Human Resources by your College/Service no later than the end of the tax year in which the expenditure was incurred.

The expenditure incurred by the University will count against the new employee's total relocation allowance.

What if the member of staff leaves resigns?

The scheme provides for the recovery of an element of the relocation assistance should the member of staff leave within the first three years after their appointment. In order that the payment can be deducted from their final salary payments schools and services are required to advise the Payroll Supervisor if a member of staff who is leaving within three years of joining the University received relocation assistance on joining and the total amount paid.

 

Updated January 2015