I tried searching for this and got some very odd, completely unrelated, results. If anyone has a link to a post on this, please link, thanks!
Are employee relocation packages "wages" or "recruitment expenses" or some other expense category?
An employee starting in May is being advanced cash to cover relocation costs. As the money is spent, the new employee will submit receipts. If there is money left over, he will return it. If he runs out, he will be advanced additional cash (again, to be accounted for with receipts).
Is this a bonus, accounted for as wages? Is the amount taxable (income tax and NI)?
Or is this a company expense, under recruitment or some other category?
An accountant I know suggested this, which seems right to me:
I would suggest to classify as staff relocation expenses.
By this I mean that the amount spent cant be classified as direct attributable Company expenses, but are just covering an employees personal costs.
Hence, these are a taxable fringe benefit (Category 3). These will show in the payslip as non cash fringe benefit.
I suggest that you declare the Category 3 fringe benefit when you have the exact amount spent. The amount spent will be part of the FSS, but you may classify it in the accounts as relocation expenses and not wages directly.
This will result as a taxable expense to the company, while the employee will be taxed on the value. Unfortunately, the employee cannot recover the tax paid on expenses.
Hi Kate
Have you had a look at HMRC guidance? Not enough information here and need to check 'eligibility', but migh be worth a look at the following for starters:-
