Relocation expenses timing

Dear HMRC, We have an employee who joined us in early 2023 (in the 2022/23 tax year), and is still finalising their relocation to the area. They still have some relocation expenses to incur which should happen in two weeks time. Unfortunately the timing of this is during a systems blackout period as we migrate ERP systems, and we are unable to process andy expense claims or make any reimbursements until later in April (which will be in the 2024/25 tax year). Since the costs will be incurred by the employee within 2023/24, but reimbursed by us to them in 2024/25, are they still eligible as qualifying costs based on timing, or will they become taxable? Thanks, Richard

Hi ,
 

To be classed as a qualifying costs, the costs have to be paid before the end of the tax year that’s after the one in which the employee started their job.  If these are paid in 2024/25 it would become a non-qualifying cost and therefore a reportable taxable benefit.  Further information can be found at :  www.gov.uk/expenses-and-benefits-relocation/whats-exempt   . Thank you  .

Hi HMRC, Thanks for the response, but can you please clarify your statement so that I am 100% clear. When you state "the costs have to be paid before the end of the tax year that’s after the one in which the employee started their job", do you mean that the costs have to be paid by the EMPLOYEE, or reimbursed/paid by the EMPLOYER. In our situation, the employee will pay in 2023/24, but the employer will reimburse in 2024/25. Thanks, 

Name removed admin .

Hi,

They will be paid or reimbursed by the employer. 

Thank you.