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UK Tax position on Relocation costs

UK Tax position on Relocation costs

Old Apr 6th 2009, 6:48 pm
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Default UK Tax position on Relocation costs

Hi. Again - apologies if this has been handled but I can't seem to find it by searching.

I'm not the sharpest tool in the box at the best of times but the HM Revenue/Customs site makes me feel positively blunt.

As we are having to take a lot less on our UK house than we originally planned, I'm trying to come up with creative ways of helping my employer give us more money...so the more that we can find that's tax-free, the better...

I think from the below link that Her Majesty allows up to £8,000 tax free of moving expenses for an international move. But I read somewhere else that after the move you might still need to be classed as a resident of the UK which presumably means ongoing tax fun (which we are not planning to have as we will be permanently based in the US (at least for the duration of the visa and maybe longer if we can get approved for GC))

http://www.hmrc.gov.uk/guidance/relocation.htm#l

Knowing that a lot of people on here have real experience... we'd really appreciate any input. If anyone recalls a thread where this has been discussed before that'd be great too.

Many thanks,

Doug.
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Old Apr 6th 2009, 7:38 pm
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Default Re: UK Tax position on Relocation costs

The £8k is an incoming amount to the UK, assuming you will be taxed as a US resident then you need to think how your employer will tax you as US.

See here

http://www.irs.gov/taxtopics/tc455.html

Your payroll tax / department should be able to tell you which items are tax free, which may be subject to gross up, or which you'll have to pay any tax on.
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Old Apr 6th 2009, 11:32 pm
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Default Re: UK Tax position on Relocation costs

Thanks and wasn't sure which end the tax would become due. On the basis that my employer's UK arm will be paying the amount prior to our departure directly to a UK removal company, I'm not sure that amount could figure in my US taxes though... or could it?

We were relying on the paragraph on HMRC site which says:

"There are also special rules on travelling expenses for people going to work abroad. If you qualify under these rules, you can get tax relief for your travelling expenses as well as the £8,000 relocation exemption. For more details, contact your Tax Office."

However, this may just be for people temporarily working abroad... although surely if these amounts are all incurred prior to my leave date from the UK company and prior to my start date with the US company then they would be subject to UK tax law?

Did anyone have to pay tax at either end for their moving expenses? To be more specific, we are hoping to get the UK arm of the company to pay international move costs, estate agent fees and solicitor fees direct and were hoping we wouldn't be taxed.

I'm rambling. Thanks anyway.

Doug.
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Old Apr 7th 2009, 1:18 am
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Default Re: UK Tax position on Relocation costs

we came over in Oct 07. Employers paid expenses for us direct (like removals firm and flights ) and thats the last we ever heard about them. They also gave us a cash lump sum to cover a variety of other expenses (white goods, hotels, car rental, etc). This sum was on the US tax return (but because it was 'protected' the firm paid any additional tax due on that bit) ie - as if it had been salary. So when they did our tax return (firm paid for accountant) the firm had to pay further tax amount so we didnt end up taxed on the expenses.
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Old Apr 8th 2009, 1:02 pm
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Default Re: UK Tax position on Relocation costs

Originally Posted by MsElui View Post
we came over in Oct 07. Employers paid expenses for us direct (like removals firm and flights ) and thats the last we ever heard about them. They also gave us a cash lump sum to cover a variety of other expenses (white goods, hotels, car rental, etc). This sum was on the US tax return (but because it was 'protected' the firm paid any additional tax due on that bit) ie - as if it had been salary. So when they did our tax return (firm paid for accountant) the firm had to pay further tax amount so we didnt end up taxed on the expenses.
Hmmm.. I think I missed a trick then. I moved to the US in October on a H1-B and my employer didn't pay any of the moving costs, which for me were substantial (about £6k). I had lengthy chats with the Tax office and they never offered up this information so I never claimed for the relief although the shipping was VAT free.

Now in the US I am claiming tax relief via for 3903 but this is at a much lower rate (I was a 40% tax payer in the UK).

I have to admit - the IRS forms and verbage they use is not the best "plain English" having filed tax returns in the UK for over 15 years I actually now appreciate their forms!!!! Ouch, never thought I would say that about HMRC!
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Old Apr 8th 2009, 2:53 pm
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Default Re: UK Tax position on Relocation costs

Originally Posted by MsElui View Post
we came over in Oct 07. Employers paid expenses for us direct (like removals firm and flights ) and thats the last we ever heard about them. They also gave us a cash lump sum to cover a variety of other expenses (white goods, hotels, car rental, etc). This sum was on the US tax return (but because it was 'protected' the firm paid any additional tax due on that bit) ie - as if it had been salary. So when they did our tax return (firm paid for accountant) the firm had to pay further tax amount so we didnt end up taxed on the expenses.
Mine was very similar, and everything was taxed as a UK individual. I don't THINK you can "take advantage" of the £8K on the way out, and then claim other items as a US taxpayer. I think that would be double dipping
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Old Apr 8th 2009, 3:18 pm
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Default Re: UK Tax position on Relocation costs

Originally Posted by emailrob View Post
Mine was very similar, and everything was taxed as a UK individual. I don't THINK you can "take advantage" of the £8K on the way out, and then claim other items as a US taxpayer. I think that would be double dipping
So are you saying that I won't be able to claim via 3903 and I should try to get the HMRC to restropectively give me a tax refund?
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Old Apr 8th 2009, 3:34 pm
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Default Re: UK Tax position on Relocation costs

Originally Posted by Pipmeister View Post
So are you saying that I won't be able to claim via 3903 and I should try to get the HMRC to restropectively give me a tax refund?
You should be able to put your expenses against your own personal tax return via 3903. I don't think HMRC would have anything to do with it. It depends of course whether they are "allowable" expenses".
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