Whether or not the amount is taxed depends on what your new employer is actually paying you for. The salary increase will obviously be taxed at your current tax rate, but where employers provide employees with financial assistance when they have to move home to take up a new job, an amount up to £8,000 can be paid tax free to meets these allowable costs.
The HM Revenue & Customs do specify that the assistance provided must meet the costs of relocation, and this includes paying the fees connected with house sale and purchase, meeting the cost of travel to the new location for house hunting trips and paying for the costs of moving household furniture and effects.
They can also meeting the costs of a bridging loan where the relocation takes place before you sell your old home. To qualify as tax free, the relocation expenses must be incurred, or the relocation benefits provided, before the end of the tax year following the one in which you start your new job.
However, some costs which are not treated as tax free include compensation paid for any loss on sale of the employee's home, interest payments for the mortgage on the employee's existing home, re-direction of mail, and Council Tax bills incurred on your old home.
By Jo Nockels
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