Relocating workers need to move fast: Deadline set for transfers under the old tax rules

MANY employees will have some quick thinking to do over the next fortnight about whether they want to uproot themselves and move to new jobs, writes Maria Scott.

In the Budget, the Chancellor announced a big cut in tax benefits to people who receive financial help from their employers to pay for transfers.

But employees will qualify for relief under the old rules if they have entered into a firm commitment to move with their jobs before 6 April.

The Inland Revenue expects the employee to have given formal notice that they intend to accept a transfer. Alternatively, the employer can give formal notification of a job transfer.

Ernst & Young, the accountancy firm, this week has advised one employer to bring forward the deadline for letting employees accept a transfer offer. It had been set at 15 April.

Employees must also start their new jobs before 1 August to qualify. The deadline for actually completing a house move will be set in the Finance Bill but the Revenue said this week that it would probably be fairly generous.

Stephen Grant, a senior tax partner at Ernst & Young, explained the old rules: 'Currently there are two concessions dealing with relocation expenses. One dealt with all the usual moving expenses and there was a long list of things it would cover. There was no cash ceiling on the expenses allowed as long as they were genuine.

'The second concession covered assistance to offset the extra costs of housing associated with the move. The limit was roughly pounds 25,000.'

One piece of good news for people relocating is that they will no longer need to have sold their homes to qualify for tax relief.

However, this previous requirement was the subject of a number of legal challenges and the Inland Revenue intends to continue to fight these.