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HMRC internal manual

Company Taxation Manual

From
HM Revenue & Customs
Updated
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Corporation Tax: management expenses: employees' relocation expenses

Employees of an investment company (or for periods starting on or after 1 April 2004 a ‘company with investment business’ ) may have to change residence because of their employment. The following expenditure will usually qualify as management expenses:

  • reasonable contributions by the company towards the removal expenses of the employees and their families,
  • the cost of visits to the new area,
  • contributions to legal expenses,
  • miscellaneous expenses and grants.

If you think the contributions are excessive, follow the guidance in CTM08330.

You can regard as contributions to removal expenses payments under schemes that guarantee the sale price of an employee’s former private residence. The investment company itself may buy the employee’s former private residence. In such a case the treatment is that:

  • the purchase and subsequent sale fall under CGT rules, and
  • any loss on sale is a capital loss and not an expense of management.

You should note that there is different treatment, in similar situations, of a company that is not an investment company. There is guidance on this at BIM46705.