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Relocation Policy

Eligibility

[All/Certain/All Senior] Employees may be eligible for relocation assistance if they are required to move home to be within reasonable commuting distance of their work location.  [Reasonable commuting distance from home to work is normally considered to be within [INSERT] miles.] 

Relocation assistance is discretionary and in assessing whether or not it is to be offered, (and the sums that will be paid) the  level of skill and responsibility of the individual Employee will be taken into account.  All offers of relocation need to be supported by a business case and are subject to authorisation by [NAME]. Relocation assistance is paid on a reimbursement basis and is strictly subject to production of VAT receipts or other appropriate evidence of payment.

Conditions

Employees are required to mitigate all expenses involved in their relocation and expenses will only be reimbursed if they are specified within the Employee's [Relocation Offer Letter] and are deemed to be
reasonable.

Relocation must take place within [six months] of the offer of relocation assistance being made.  If relocation does not take place within [six months] then the offer will be withdrawn.  This may result in the termination of employment if this is conditional upon relocation.

Employees will only be offered relocation assistance if they agree to the terms of, and sign, an Agreement to Undertake to Repay Relocation Expenses [SL55]. This provides for repayment of the total sums paid in relocation assistance (or a percentage thereof) under this Policy in circumstances where the Employee's employment terminates within 2 years of receiving payment.  The total amount repayable is reduced proportionally for time remaining in employment following the receipt of assistance.

Repayment arrangements as a result of termination of employment from the date the sums were paid will be as follows:

(a)    Within 3 months:                100% 
(b)    From 3 months up to 6 months:         87.5% 
(c)    From 6 months up to 9 months:         75%
(d)    From 9 months up to 12 months:          62.5%
(e)    From 12 months up to 15 months:      50%
(f)    From 15 months up to 18 months:     37.5%
(g)    From 18 months up to 21 months:     25%
(h)    From 21 months up to 24 months:     12.5%

After 24 months:                 Nil

Repayments will not be required if the Employee's employment terminates by reason of redundancy or if the Employee terminates their employment in response to a fundamental breach of contract by the Company.

Repayment of the sums set out above shall be deducted from the Employee's final salary, which the individual consents to. If the Employee's final salary is insufficient to cover the cost of the sums due then the employee will make arrangements to repay the sums within 28 days of the date their employment terminates.  

Financial Assistance

Employees should not gain financially as a result of the relocation, e.g. the residence must be the sole residence of the Employee, i.e., it is not permissible to use relocation assistance to fund a letting property.  Relocation assistance will be a stipulated maximum monetary amount, up to which Employees may claim reimbursement against a schedule of [agreed Items of Expenditure].  These are covered in the [Relocation Offer Letter], however examples of the costs that may be reimbursed are set out below.  Relocation assistance will normally be offered up to a maximum of [£10,000/insert amount]. All relocation assistance must be agreed in advance. Any expenses incurred without advance agreement will not be reimbursed. Depending on the circumstances, disciplinary action may follow for any employee who seeks to claim expenses that have not been agreed in advance. 

Employees must also complete an Agreement to Undertake to Repay Relocation Expenses [SL55] ahead of any expenses being reimbursed.

Expenses of sale items may include:

  • Legal Fees.
  • Penalties for redeeming a loan relating to the residence.
  • Estate Agent (or auctioneer) fees.
  • Advertising expenses.
  • Charges for disconnecting public utilities serving the residence.
  • Expenses for maintaining, insuring or preserving the security of the residence at any time when unoccupied pending disposal.

Expenses of acquisition may include:

  • Legal fees.
  • Procurement fees connected with a loan, mortgage arrangement and cancellation fees.
  • The cost of insurance to cover a loan which is equal to the whole or a substantial part of the value of the residence (indemnity premium).
  • Survey fees.
  • Land Registry fees.
  • Stamp Duty.
  • Public utilities connection charges.

Costs detailed in this Section will only be paid tax free up to the HMRC limits and where an existing property has been sold.

Expenses of Leaving Rented Accommodation, i.e.:

  • Charges for disconnecting public utilities serving the residence.
  • Any rent payable on the property while unoccupied.

Removal Expenses, i.e.:

  • Removal and associated insurance.
  • Detaching domestic fittings from the existing property.
  • Attaching (and if necessary adapting) domestic fittings to the new property if they are brought from the old property).
  • Reasonable costs of temporary storage and insurance of personal property.

[Duplication Expenses

Relocation assistance may include the purchase of domestic goods intended to replace goods which were used at the Employee's former residence but which are not suitable for the new residence.  This amount should be reduced by an amount which represents the sale of the replaced goods.

Note:    Only allowable if the Employee sells their existing property and purchases a new property.]

[Travel and Subsistence

The Company may also be prepared to contribute towards the cost of:

  • Travel and subsistence for the Employee and their family to visit the new area in connection with the change; and
  • The Employee's costs (excluding those of their family) of travelling between the existing residence and the new place of work (where use of the fuel card does not cover such costs), if the work move pre-dates the home move or of travelling between the new residence and former place of work, if the work move post-dates the home move or of travelling between the existing residence and any temporary accommodation.]

[Expenses of Aborted Acquisition

The Employee may be allowed to claim any expenses detailed above in respect of the Sale of Property or Removal Expenses where the move to the new property is aborted because of circumstances outside the control of the Employee or because the Employee reasonably declines to proceed with the move.]

HMRC (Inland Revenue) Implications

All offers of relocation are subject to the prevailing HMRC regulations.  The Employee is responsible for any statutory Income Tax and National Insurance liability.

The [Finance Department] will calculate any tax due and advise the Employee and HMRC accordingly.  Individuals will be assessed and notified of their liability by the HMRC who will also advise as to how any sums owed will be collected.

If relocation assistance is provided, any payments received or any goods or services provided will form part of the Employee's taxable earnings.  However, as the relocation is job-related, the first [£8,000] is exempt from tax to the extent that the relocation expenses qualify for the exemption set out in Chapter 7 of Part 4 of the Income Tax (Earnings and Pensions) Act 2003 and Part 8 of Schedule 3 of the Social Security (Contribution) Regulations 2001 (SI 2001/1004) respectively. 

These conditions include:

(a)    The Employee has to move home to take up a new position with the Company, or to continue their current role at a new location, and their existing home is not within reasonable daily travelling distance of their new workplace.

(b)    The Employee does not have to dispose of their existing home but the home to which they move must become their sole or main residence (i.e., they should not return to their previous home at weekends, etc).

(c)    That the expenses must be incurred or the benefits provided before the end of the tax year following the tax year in which the Employee starts their new job (i.e., 6th April to 5th April) using an [Expense Claim Form]. However, please note that as set out above, relocation under this policy must take place within 6 months of the offer of relocation being made in order to qualify for reimbursement of relocation expenses. 

(d)    All items reimbursed must be covered by the list of approved expenses detailed in the [Financial Assistance Schedule].

Taxation

To ensure that the Employee's tax liability is minimised, most of the items shown in the [Financial Assistance Schedule] have been selected because they can currently be paid tax-free up to a limit of [£8,000].

Any relocation expenditure above [£8,000] will be liable for tax for which the Employee will be responsible.

Expenditure on items not detailed in the [Schedule] will be subject to tax and, in some instances, National Insurance.

Costs detailed in the section Expenses of Acquisition will only be paid tax free where an existing property has been sold.

Employees shall indemnify the Company on a continuing basis in relation to any income tax and National Insurance contributions (save for employers' National Insurance contributions), including any related interest, penalties, costs and expenses, which may be incurred by the Company if this exemption does not apply.

Tax in Relation to Other Loans

Employees should note that if the total value of all beneficial loans (including season ticket loans) provided to them by the Company exceeds the prevailing HMRC limits, they will be liable for tax on the notional interest that would be charged on the total value of these loans.  Additionally, the granting of such a loan may prejudice the mortgage loan for the new property.  The Employee should check whether this is the case.

This document has been created by, or on behalf of ESP Ltd, as a general document and as a guide in relation to its subject matter and has not been bespoke drafted for you or the specific circumstances in which you are looking to use it. Prior to using this document and undertaking any HR process you must consult your organisation’s own policies and procedures to ensure that you do not do anything in conflict with your own policies and procedures.  If in any doubt as to how to use this document or, if you require any legal advice, please feel free to contact ESP Ltd on 0333 006 2929 and our legal team will be more than happy to assist.  ESP Ltd will not be liable in any way for any actions undertaken by you or your use of this document unless we have been consulted regarding your use of this document as legal advisor to your business or have bespoke drafted any documentation in response to a specific support request.